South Jersey Gas Co. v. Mueller Co.

• Decision Date: 21 November 2011
• Docket Number: Civil No. 09-4194 (RBK/JS),Doc. No. 62
• Parties: SOUTH JERSEY GAS COMPANY, Plaintiff, v. MUELLER COMPANY, LTD, MUELLER GROUP, LLC, ECLIPSE INC., ROCKFORD ECLIPSE, INC., ECLIPSE COMBUSTION, and/or POWER EQUIPMENT COMPANY, XYZ ENTITY (A-Z), Defendants.
• Court: U.S. District Court — District of New Jersey

SOUTH JERSEY GAS COMPANY, Plaintiff,

v. MUELLER COMPANY, LTD, MUELLER GROUP, LLC, ECLIPSE INC.,ROCKFORD ECLIPSE, INC., ECLIPSE COMBUSTION,and/or POWER EQUIPMENT COMPANY, XYZ ENTITY (A-Z), Defendants.

Doc. No. 62

Civil No. 09-4194 (RBK/JS)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY CAMDEN VICINAGE

Dated: November 21, 2011

MEMORANDUM OPINION AND ORDER

This matter is before the Court on plaintiff South Jersey Gas Company's (hereinafter "South Jersey Gas" or "plaintiff") "Motion for Leave to File Amended Complaint." [Doc. Nos. 62, 66].¹ Plaintiff seeks to amend its complaint to assert a Consumer Fraud Act claim. Defendants oppose the motion [Doc. Nos. 64, 65] and oral argument was held. For the reasons to be discussed plaintiff's motion is DENIED.

BACKGROUND

On July 17, 2009, plaintiff filed its complaint against defendants in state court. [Doc. No. 1-1]. The case was removed to federal court on August 17, 2009. Plaintiff's complaint named (1) Mueller Company, Ltd. and Mueller Group, LLC (collectively "Mueller"), and (2) Rockford Eclipse, Inc. and Eclipse Combustion and/or Power Equipment Co. (collectively "Eclipse").² Plaintiff alleges it is a public utility corporation engaged in the transmission, distribution, transportation and sale of natural gas in South Jersey. Proposed Amended Complaint ("Proposed Amend. Compl.") ¶¶ 1, 8. Plaintiff further alleges "upon information and belief" that "in or around the latter part of the 1980s and early part of the 1990s" it bought "various valves" from Eclipse. Id. ¶ 14. In addition, plaintiff alleges "[i]n or around 1993" Eclipse sold its Rockford Eclipse product line to Mueller. Id. ¶ 22.

Plaintiff bought defendants' valves for installation at customers' homes and/or businesses. Id. ¶¶ 16, 17. Plaintiff's complaint alleges Eclipse and Mueller represented their valves to be "free from defects in material and workmanship under normal use, service and maintenance." Id. ¶21. Plaintiff contends defendants'valves were defective. Plaintiff refers to an explosion and other "failures" that occurred in February 2005, July 18, 2005, and "recently" (March 12, 2008), allegedly caused by defective valves. Id. ¶¶ 33-35. Plaintiff alleges an investigation completed on or around July 2008 "concluded that the explosion and other failures were caused by defendants' valves and that the valves were installed in 70,000 residences or businesses. Id. ¶36. Plaintiff's original complaint alleged breach of express warranties, as well as of implied warranties of merchantability and fitness for a particular purpose. As will be discussed, these warranty claims were dismissed.

In September 2009, Mueller filed its Motion to Dismiss Plaintiff's Complaint or in the alternative for Summary Judgment. [Doc. No. 10]. Eclipse filed a Motion to Dismiss. [Doc. No. 11]. On April 27, 2010, the Honorable Robert B. Kugler, USDJ, granted Mueller's Motion for Summary Judgment because the statute of limitations had run. [Doc. Nos. 33, 34]. Because Eclipse relied on documents outside the pleadings, Judge Kugler converted its Motion to Dismiss into a Motion for Summary Judgment. See 2010 WL 1742542, at *5 (D.N.J. April 27, 2010). Eclipse's Motion for Summary Judgment was granted on May 26, 2010, terminating the case. [Doc. Nos. 50, 51].

On May 7, 2010, plaintiff filed its Motion for Leave to File Amended Complaint. [Doc. No. 38]. The motion was filed afterMueller's Motion for Summary Judgment was granted (April 27, 2010) but before Eclipse's Motion for Summary Judgment was granted (May 26, 2010). On May 28, 2010, after the case was terminated, this Court denied plaintiff's Motion to Amend as moot. [Doc. No. 52].

Plaintiff appealed Judge Kugler's rulings to the Third Circuit. On May 13, 2011, the Third Circuit issued its Opinion and affirmed the dismissal of plaintiff's claims as "barred by both the plain language of the warranties and by the statute of limitations." South Jersey Gas Co. v. Mueller Co., Ltd., 429 Fed. Appx. 128, 130 (3d Cir. 2011). However, the Court vacated the denial of plaintiff's Motion to Amend because this Court "erroneously concluded that South Jersey's motion was moot." Id. at 131. The Third Circuit remanded the case for consideration of plaintiff's Motion to Amend. Id.

After the Third Circuit issued its mandate, plaintiff filed the Motion for Leave to File Amended Complaint presently before the Court. Plaintiff's proposed amended complaint is identical to its original complaint except for the addition of several background paragraphs, the deletion of its breach of warranty claims, the removal of all specific references to a warranty, and the inclusion of a claim under the New Jersey Consumer Fraud Act ("CFA").

Plaintiff's new allegations are contained in paragraphs 9-13, 21, 29, and 30-32 of the proposed amended complaint. Specifically, plaintiff now avers:

9. Connected to Plaintiff's service lines were approximately 70,000 shut-off valves designed, manufactured[,] distributed and sold by defendants.

10. When installed, a valve is located upstream of the Plaintiff's customer's gas meter, and allows Plaintiff to prevent gas from flowing to the meter in order, for example, to service, move, remove or replace the meter. It allows for a shut-off of gas to the meter and downstream of the meter.

11. In general, the gas distribution main runs parallel with a street, and a service line runs perpendicular from the distribution main to the customer's residential or business location. At the end of the service pipe is a riser from the ground to the gas meter. This riser is frequently located on the exterior of the residence or other building using the gas. On the riser, just prior to the meter, is the shut-off valve.

12. Until work is performed on a meter, there is rarely a reason to operate the valve off so as to prevent gas from flowing to the meter. Since most valves were installed when new service lines were installed to connect new customers, it was foreseeable to defendants that most valves would not be shut for years and even decades after installation.

13. Defendants as designers, manufacturers, and sellers of the valves knew or should have known that the valves would not be operated as a matter of routine, standard operating procedure.

21. Defendant Eclipse represented that these Valves were free from defects in material and workmanship under normal use, service and maintenance.³

29. Defendant Mueller represented that these Valves were free from defects in material and workmanship under normal use, service and maintenance.⁴

30. Defendants also made various representations about the Valves, including the following:

"maximizes resistance to corrosion"

"additional seal to prevent atmospheric leakage"

"for a tight seal and last indefinitely"

"insures precise tolerances are held between mating parts"

"provide thousands of cycles with no leakage and virtually no wear"

"No torque adjustments needed--even if stationary for long periods of time"

"Designed To Meet Your Needs"

"We guarantee the performance of our valves"

Operates properly "over the operating temperature range"

"Heavy duty operating head withstands tool abuse"

"Insulated O-Ring Union"

"All models meet or exceed" standards and requirements

"Temperature Range: -20° to +150°F"

"Maintenance Free Gas Service Valve"

"low design torque compared to conventional valves, yet the rotor cannot be turned by hand"

"seals valve against atmospheric leakage"

31. Contrary to the representations provided by Defendants Eclipse and Mueller, the Valves were not free from defects in material and workmanship under normal usage, service and maintenance.⁵

32. Contrary to the representations provided by defendants, the Valves failed to meet the promises made to Plaintiff.

DISCUSSION

Standard of Review

The first issue to address is the standard of review that applies to plaintiff's Motion to Amend. Ordinarily this a straightforward issue. However, the present situation is complicated by the fact that plaintiff's first Motion to Amend was filed after summary judgment was awarded to Mueller and before summary judgment was granted to Eclipse. Plaintiff argues the Court should apply Rule 15(a)(2). Mueller and Eclipse argue Rule 59(e) applies.

Although the parties have their own views, the Third Circuit's ruling could not be clearer. Specifically, the Third Circuit ruled that "as to Mueller, the motion to amend should have been construed as a motion under Rule 59(e) because it was filed within 28 days of judgment." 429 Fed. Appx. at 131 (citing Ahmed v. Draghovich, 297 F.3d 201, 209 (3d Cir. 2002)). As to Eclipse, the Third Circuit ruled that "the motion was properly raised under Rule 15 and it should have been reviewed under the well-established standards governing such motions." Id. As will be discussed, however, although different rules apply to Mueller and Eclipse, the result is the same.

The controlling decision for the standard of review under Rule 59(e) is Adams v. Gould Inc., 739 F.2d 858 (3d Cir. 1984), cert. denied, 469 U.S. 1122 (1985). The issue presented in Adams is similar to the one before this Court. In Adams, the plaintiff moved to alter or amend judgment and for leave to file a second amended complaint after the lower court had entered summary judgment for the defendants. Adopting the Fifth Circuit's understanding of the relationship between Rules 15(a) and 59(e), the Third Circuit reversed the district court's denial of the plaintiff's motion and held that a court should apply the same factors to "a timely motion . . . filed under [Rule 59(e)]" as it would to a motion to amend filed under Rule 15(a) . Id. at 864 (citing Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 597 n.1 (5th Cir. 1981)); see also Burtch v. Milberg Factors, Inc., _ F.3d _, 2011 WL 5027511, at *15 (3d Cir. 2011) ("In this Circuit, where a timely motion to amend judgment is filed under Rule 59(e), the Rule 15 and 59 inquiries turn on the same factors") (citation and quotation omitted)....