Roseville Plaza Ltd. Partnership v. US Gypsum Co., No. 91-CV-72626-DT.

CourtUnited States District Courts. 6th Circuit. United States District Court (Western District Michigan)
Writing for the CourtMacKENZIE, P.J., and WAHLS and SULLIVAN, JJ
Citation811 F. Supp. 1200
PartiesROSEVILLE PLAZA LIMITED PARTNERSHIP, a Michigan Limited Partnership, Plaintiff, v. UNITED STATES GYPSUM COMPANY, a Delaware Corporation, and W.R. Grace & Co. — Conn., a Connecticut Corporation, Defendants.
Docket NumberNo. 91-CV-72626-DT.
Decision Date15 December 1992

811 F. Supp. 1200

ROSEVILLE PLAZA LIMITED PARTNERSHIP, a Michigan Limited Partnership, Plaintiff,
v.
UNITED STATES GYPSUM COMPANY, a Delaware Corporation, and W.R. Grace & Co. — Conn., a Connecticut Corporation, Defendants.

No. 91-CV-72626-DT.

United States District Court, E.D. Michigan, S.D.

December 15, 1992.


811 F. Supp. 1201
COPYRIGHT MATERIAL OMITTED
811 F. Supp. 1202
Philip J. Goodman, Steven G. Silverman, Birmingham, MI, Kenneth B. McClain, Independence, MO and Michael B. Serling, Birmingham, MI, for plaintiff

Robert J. Franzinger, Zora E. Johnson, Detroit, MI, and Raymond Cullen and Gordon Cooney, Philadelphia, PA, for defendants.

OPINION

DUGGAN, District Judge.

This is a products liability action filed by plaintiff Roseville Plaza Limited Partnership against defendant United States Gypsum Company.1 Before the Court are defendant's motion to dismiss based upon the economic loss doctrine; motion for summary judgment based upon expiration of the statute of limitations or, in the alternative, for a separate statute of limitations trial; motion for summary judgment of plaintiff's restitution claim; and motion for summary judgment based upon lack of evidence to support plaintiff's essential allegations.2 The Court has considered the written briefs filed in support of and in opposition to such motions, and has had the opportunity to hear arguments from counsel at an October 29, 1992, hearing. For the reasons that follow, defendant's motions shall be granted in part and denied in part.

I. Factual and Procedural Background

Plaintiff is the owner of a shopping center located in Roseville, Michigan, known as Roseville Plaza. When Roseville Plaza was constructed in the early 1960's, beams throughout the building were covered with an asbestos-containing fireproofing material (ACFM). Plaintiff contends that defendant designed, manufactured and sold the ACFM; that the ACFM causes cancer, asbestosis and other diseases; that the ACFM suffered bonding failures and fell to the floor and/or through normal and foreseeable use released dust which caused asbestos fibers to become airborne; and that it has and will continue to spend considerable sums removing and replacing the ACFM. Plaintiff seeks compensatory damages in excess of $2,000,000 plus exemplary damages under the following theories: negligence (Count III), misrepresentation (Count IV), implied warranty of merchantability (Count VI), implied warranty of fitness (Count VII), civil conspiracy (Count VIII), nuisance (Count IX) and restitution (Count X).3

II. The Economic Loss Doctrine

Defendant moves, pursuant to Federal Rule of Civil Procedure 12(b)(6), for dismissal of plaintiff's complaint in its entirety arguing that the loss claimed by plaintiff is solely economic and, therefore, plaintiff's exclusive remedies are provided under the UCC. According to defendant, since plaintiff does not seek any remedies pursuant to the UCC, and since all UCC claims are barred by the UCC statute of limitations in any even,4 plaintiff has failed

811 F. Supp. 1203
to state a claim upon which relief may be granted. Defendant's argument was raised in its previous Rule 12(b)(6) motion, and such argument was rejected by the Court. In renewing its motion, defendant relies upon Neibarger v. Universal Cooperatives, Inc., 439 Mich. 512, 486 N.W.2d 612 (1992), a recent Michigan Supreme Court decision issued after this Court ruled on defendant's prior Rule 12(b)(6) motion. Plaintiff opposes defendant's motion distinguishing this case from Neibarger and arguing that the economic loss doctrine does not apply to the present action

The standard of review for a Rule 12(b)(6) motion to dismiss is "failure to state a claim upon which relief may be granted." Fed.R.Civ.P. 12(b)(6). Under this standard, "the factual allegations in the complaint must be regarded as true. The claim should not be dismissed unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Windsor v. The Tennessean, 719 F.2d 155, 158 (6th Cir.1983), cert. denied, 469 U.S. 826, 105 S.Ct. 105, 83 L.Ed.2d 50 (1984) (citation omitted).

In Neibarger, the Michigan Supreme Court held: "Where a plaintiff seeks to recover for economic loss caused by a defective product purchased for commercial purposes, the exclusive remedy is provided by the UCC, including its statute of limitations." Neibarger, 439 Mich. at 527-28, 486 N.W.2d 612. "Having decided that the UCC and the economic loss doctrine reflect the proper approach for resolution of defective product claims in the commercial arena," the Court then turned to application of that doctrine under the facts of the cases before it. Id. at 529, 486 N.W.2d 612.

The Neibarger plaintiffs were owners and operators of dairy farms who had installed new milking systems. After the systems had been in place for some time, plaintiffs' cattle became ill and died or had to be sold for beef because of their unproductivity or unsuitability as milking animals. Plaintiffs alleged the milking systems were defectively designed and installed by defendants and sought to recover lost profits and consequential damages flowing from the alleged defects. In holding that plaintiffs' alleged damages fell squarely under the UCC and the economic loss doctrine, the Court stated that when characterizing injuries as economic (versus non-economic loss), "the proper approach requires consideration of the underlying policies of tort and contract law as well as the nature of the damages." Id. at 531, 486 N.W.2d 612.

In Detroit Board of Education v. Celotex Corp., 196 Mich.App. 694, 493 N.W.2d 513 (1992), a panel of the Michigan Court of Appeals discussed such policy considerations in a case factually similar to the present action. Defendant argues that the Michigan Court of Appeals' discussion of Neibarger and the economic loss doctrine is dictum and has no precedential value. This Court disagrees.5 Noting that the relevance of the Neibarger decision was raised at oral argument, the court of appeals stated that it was "obliged" to address the issue before reaching the issues stipulated for review. Celotex, 196 Mich.App. at 701 n. 2, 493 N.W.2d 513. The court then discussed the economic loss doctrine, as set forth in Neibarger, at length, ending its discussion with the following: "We conclude, on the facts of this case, that plaintiffs' proper remedy lies in tort, not contract

811 F. Supp. 1204
or the UCC." Id. at 705, 493 N.W.2d 513. Had the court concluded that plaintiff's tort claims were barred by the economic loss doctrine, clearly it would have been unnecessary to proceed with a discussion of the issues stipulated for review. This Court believes the Celotex court's discussion of the economic loss doctrine and its conclusion regarding the applicability of the doctrine to the facts before it was necessary to the formulation of the decision and directly related to the issues presented. The Court finds the decision relevant to the case sub judice, and shall give the decision due regard. See Sours v. General Motors Corp., 717 F.2d 1511, 1513-14 (6th Cir.1983).6

In Celotex, plaintiff (the Detroit Board of Education), filed suit against defendants (asbestos manufacturers, distributors and installers of a variety of asbestos products used in plaintiff's school buildings), seeking to recover asbestos abatement costs. The court of appeals recognized that in view of Neibarger, if the damages plaintiff sought were for economic losses, plaintiff's exclusive remedy would be under the UCC with its four-year period of limitations. Celotex, 196 Mich.App. 694, 701-02, 493 N.W.2d 513. The court nevertheless concluded that the economic loss doctrine did not bar plaintiff's tort claims.7 This Court finds the following quotation from Celotex to be well reasoned and persuasive:

According to Neibarger, tort remedies for defective products are premised on a policy of allocating the risk of unsafe products to manufacturers and sellers in order to encourage the design of safer products, and this policy is not served where the parties to a commercial transaction may bargain for the terms and specifications of a sale and the only losses are economic. Id. 439 Mich. at at 523 486 N.W.2d 512. Stripped to the essence, then, policy holds that "defects of suitability and quality are redressed through contract actions and safety hazards through tort actions." Northridge Co. v. W.R. Grace & Co., 162 Wis2d 918, 934; 471 NW2d 179, 185 (1991).
In the present case, plaintiffs do not allege that defendants' products were inferior in quality or did not work for their intended purpose. They do not claim any injury to the product themselves. Rather, they claim that defendants' products are safety hazards that have created a potential health threat and caused them to suffer damages in abating the hazard. We also observe that it is highly unlikely that the parties could have anticipated and bargained over the hazards of asbestos at the time the products were sold, which was apparently years before the risks of the material were known. In short, the risk involved here is not the type that is allocated to a party through negotiation. We conclude, on the facts of this case, that plaintiffs' proper remedy lies in tort, not in contract or the UCC.

Id. 196 Mich.App. at 704-05, 493 N.W.2d 513 (footnote omitted).

Similarly, in 80 South Eighth St. Ltd. Partnership v. Carey-Canada, Inc., 486 N.W.2d 393 (Minn.1992), the Minnesota Supreme Court held that the economic loss doctrine did not bar the owner of a commercial building with asbestos-containing fireproofing from suing the manufacturer under various tort theories for the costs of maintenance, removal and replacement of the fireproofing. Id. at 399. The Court considered the issue in view of the economic loss doctrine as set forth in Hapka v.

811 F. Supp. 1205
Paquin Farms, 458 N.W.2d 683 (Minn. 1990). Notably, the Michigan...

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9 practice notes
  • Sebago, Inc. v. Beazer East, Inc., C.A. No. 96-10069-MLW.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • March 31, 1998
    ...Greenville v. W.R. Grace & Co., 827 F.2d 975, 978 (4th Cir.1987) (same); Roseville Plaza Ltd. Partnership v. United States Gypsum Co., 811 F.Supp. 1200, 1205 (E.D.Mich.1992) (same); Detroit Bd. of Educ. v. Celotex Corp., 196 Mich.App. 694, 703-04, 493 N.W.2d 513 (1992) (same); Trustees of C......
  • Lawyers Title Ins. Corp. v. Dearborn Title Corp., No. 96-3820
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • July 1, 1997
    ...494 U.S. 596, 602-08, 110 S.Ct. 1361, 1365-68, 108 L.Ed.2d 548 (1990); Roseville Plaza Limited Partnership v. United States Gypsum Co., 811 F.Supp. 1200, 1210-11 (E.D.Mich.1992), aff'd, 31 F.3d Page 1166 397 (6th Cir.1994); Alex J. Grant, Note, "When Does the Clock Start Ticking?: Applying ......
  • Richardson v. Oldham, No. 2:91-CV-158.
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • December 16, 1992
    ...to train or supervise Officer Harrell and that such failures caused injury to Plaintiffs. Therefore, summary judgment is appropriate 811 F. Supp. 1200 with respect to Plaintiffs' claims against Rick Berry in his official C. State Law Claims Defendants seek summary judgment of Plaintiffs' st......
  • City of St. Louis v. American Tobacco Co. Inc., No. 4:98CV02087 ERW.
    • United States
    • United States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
    • July 2, 1999
    ...Inc., 222 A.D.2d 119, 125-26, 130, 644 N.Y.S.2d 919 (N.Y.App.Div.1996); Roseville Plaza Ltd. Partnership v. United States Gypsum Co., 811 F.Supp. 1200, (E.D.Mich.1992)(concluding that the Michigan Supreme Court would accept section 115 as a statement of the common law of restitution); Board......
  • Request a trial to view additional results
9 cases
  • Sebago, Inc. v. Beazer East, Inc., C.A. No. 96-10069-MLW.
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • March 31, 1998
    ...Greenville v. W.R. Grace & Co., 827 F.2d 975, 978 (4th Cir.1987) (same); Roseville Plaza Ltd. Partnership v. United States Gypsum Co., 811 F.Supp. 1200, 1205 (E.D.Mich.1992) (same); Detroit Bd. of Educ. v. Celotex Corp., 196 Mich.App. 694, 703-04, 493 N.W.2d 513 (1992) (same); Trustees of C......
  • Lawyers Title Ins. Corp. v. Dearborn Title Corp., No. 96-3820
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • July 1, 1997
    ...494 U.S. 596, 602-08, 110 S.Ct. 1361, 1365-68, 108 L.Ed.2d 548 (1990); Roseville Plaza Limited Partnership v. United States Gypsum Co., 811 F.Supp. 1200, 1210-11 (E.D.Mich.1992), aff'd, 31 F.3d Page 1166 397 (6th Cir.1994); Alex J. Grant, Note, "When Does the Clock Start Ticking?: Applying ......
  • Richardson v. Oldham, No. 2:91-CV-158.
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • December 16, 1992
    ...to train or supervise Officer Harrell and that such failures caused injury to Plaintiffs. Therefore, summary judgment is appropriate 811 F. Supp. 1200 with respect to Plaintiffs' claims against Rick Berry in his official C. State Law Claims Defendants seek summary judgment of Plaintiffs' st......
  • City of St. Louis v. American Tobacco Co. Inc., No. 4:98CV02087 ERW.
    • United States
    • United States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
    • July 2, 1999
    ...Inc., 222 A.D.2d 119, 125-26, 130, 644 N.Y.S.2d 919 (N.Y.App.Div.1996); Roseville Plaza Ltd. Partnership v. United States Gypsum Co., 811 F.Supp. 1200, (E.D.Mich.1992)(concluding that the Michigan Supreme Court would accept section 115 as a statement of the common law of restitution); Board......
  • Request a trial to view additional results

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