Urban Outfitters, Inc. v. United Constr. Co.

• Decision Date: 12 September 2022
• Docket Number: 3:21-cv-00109-MMD-CLB
• Parties: URBAN OUTFITTERS, INC., Plaintiff, v. DERMODY OPERATING COMPANY, LLC, et al., Defendants.
• Court: U.S. District Court — District of Nevada

1

URBAN OUTFITTERS, INC., Plaintiff, v. DERMODY OPERATING COMPANY, LLC, et al., Defendants.

No. 3:21-cv-00109-MMD-CLB

United States District Court, D. Nevada

September 12, 2022

ORDER

MIRANDA M. DU CHIEF UNITED STATES DISTRICT JUDGE

I. SUMMARY

This is a breach of contract action involving the construction of a fulfillment and distribution center. In its amended complaint (ECF No. 65 (“FAC”)), Plaintiff Urban Outfitters Inc. (“Urban”) brings claims against Defendants Dermody Operating Company, LLC (“Dermody”), the project developer, United Construction Corporation (“United”), the general contractor, and GAF Materials Corporation (“GAF”), the manufacturer of roofing materials for the project. As pertinent here, the FAC asserts four claims against GAF: consumer fraud; deceptive trade practices; civil conspiracy; and civil aiding and abetting. (Id. at 18-27.) Before the Court is GAF's motion to dismiss (ECF No. 89 (“Motion”)) these claims.^[1] Because Urban has failed to plead facially plausible claims, and as further explained below, the Court will grant the Motion but will grant Urban leave to amend its claims.

II. BACKGROUND

The Court adapts the following allegations from the FAC. Urban contracted with Defendants Dermody and United on May 11, 2011, for the construction of a warehouse, distribution, and fulfillment center (the “Center”) in Reno, Nevada. (ECF No. 65 at 3.) Urban agreed to pay Dermody and United $25,540,253.00 for the Center, which would encompass approximately 462,720 square feet, as well as associated driveways, parking areas, on-site utilities, and landscaped areas. (Id.) Dermody and United agreed to be responsible for all errors and omissions committed by Dermody or United, along with any architects, subcontractors, and their agents and employees. (Id. at 4.) Defendant GAF manufactured the materials used in the design and installation of the Center's roof and provided a 10-year guarantee to Urban for the materials and workmanship related to installation. (Id. at 24-25.) The construction was substantially completed on January 31, 2012, and Urban took occupancy on February 2, 2012. (ECF Nos. 13-2, 13-3.)

Urban alleges that sometime around October 2019, the Center's roof sustained significant damage, which Urban initially believed to be the result of excessive rainfall. (ECF No. 65 at 8.) The damage included weakened roof decking, punctures in the roof membrane due to loosened fasteners, and water damage through the punctures, cracks, and joints. (Id.) Urban hired Sean Wagner of NewStudio Architecture, LLC, to examine the damage and investigate its cause. (Id.) Wagner conducted a site visit on September 9-12, 2019, and prepared a report dated October 4, 2019. (ECF No. 1-1 at 44-46.) Wagner concluded that the damage was not in fact caused by a one-time weather event but was rather attributable to conditions “not taken into consideration in the original design and construction” of the Center. (ECF No. 65 at 8-9.)

Urban further alleges that the October 2019 roof damage stems from defects in the Center's original roof construction in 2011. (ECF No. 65 at 21-22.) In 2011, while the building was still under construction, the roof first suffered wind damage due to United's defective installation of skylights. (Id. at 7.) After it finished construction, United began performing repairs on the Center's roof. (Id.) United consulted with GAF, the manufacturer of the roofing materials, to formulate a repair plan for the wind damage. (Id. at 21, 25.) GAF assessed the original roof design and then shared its findings with United's roofing subcontractor in a letter dated January 24, 2013. (Id.) In the letter, GAF acknowledges that the roof “did not meet contractual requirements,” due to issues like incorrect roof decking used with GAF's roof assemblies as well as an insufficient moisture barrier. (Id. at 21-22.) The Center's defective roof installation would have required “complete removal and replacement of the nearly completed roof at significant cost to both GAF and [United]” and “would void the GAF guarantee.” (Id. at 25.) Urban alleges, however, that GAF failed to disclose this fact to Urban and, as a result, Urban did not know of GAF's letter until April 2021, eight years later. (Id. at 22.) In particular, Urban's fraud-based claims arise from a June 2015 letter it received from GAF. (Id. at 21-22, 25-26, 27.) In this letter, GAF characterized the roof as “repaired” “without disclosing their knowledge that the roof did not meet contractual requirements” back in 2013. (Id. at 22.) Urban alleges that GAF knew that its statement confirming the roof's repaired status was false. (Id.)

Urban initially filed suit against Defendants Dermody and United, alleging breach of contract and related causes of action. (ECF No. 1.) Both Dermody and United moved to dismiss Urban's initial complaint, arguing that Nevada's statutes of repose and limitations barred Urban from pursuing its claims. (ECF No. 10.) Urban then opposed the motions to dismiss and sought to file an amended complaint to add claims and parties to its lawsuit. (ECF Nos. 20, 22, 34.) In November 2021, the Court denied Defendants' motions to dismiss and granted Plaintiff leave to file an amended complaint. (ECF No. 63 at 1-2.) Urban then filed the FAC, which includes four claims against newly added GAF. (ECF No. 65 at 18-27.)

GAF now moves to dismiss the claims asserted against it, arguing that Urban fails to state its fraud-based claims with particularity under Federal Rules of Civil Procedure 12(b)(6) and 9(b). (ECF No. 89 at 2-3.) Urban opposes GAF's motion to dismiss and argues that it has pleaded facially plausible claims. (ECF No. 96.)

III. LEGAL STANDARD

A court may dismiss a plaintiff's complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A properly pleaded complaint must provide “a short and plain statement of the claim showing that the pleader is entitled to relief.”

Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands more than “labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).

In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, a district court must accept as true all well-pleaded factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. See id. at 678. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. See id. Second, a district court must consider whether the factual allegations in the complaint allege a plausible claim for relief. See id. at 679. A claim is facially plausible when the plaintiff's complaint alleges facts that allow a court to draw a reasonable inference that the defendant is liable for the alleged misconduct. See id. at 678. Where the complaint does not permit the Court to infer more than the mere possibility of misconduct, the complaint has “alleged-but it has not show[n]-that the pleader is entitled to relief.” Id. at 679 (alteration in original) (internal quotation marks and citation omitted). That is insufficient. When the claims in a complaint have not crossed the line from conceivable to plausible, the complaint must be dismissed. See Twombly, 550 U.S. at 570.

IV. DISCUSSION

GAF generally argues that Urban fails to plead any facially plausible claims against it with the specificity required under Federal Rule of Civil Procedure 9(b). (ECF No. 89 at 8, 11, 12.) As further explained below, the Court agrees. However, the Court finds that Urban's claims may be cured by amendment. The Court addresses below GAF's Motion as to each of Urban's claims against it, and then explains why it will grant Urban leave to amend the claims that the Court agrees should be dismissed.

A. Consumer Fraud/Deceptive Trade Practices Claims

GAF argues that dismissal of this claim is proper because Urban fails to specify how GAF deceived Urban, how Urban relied on GAF's misrepresentations or omissions to its detriment, or how GAF's alleged actions caused Urban's damages. (ECF No. 89 at 8.) Urban counters that it did “specifically” plead a misrepresentation and an omission by GAF as well as its detrimental reliance resulting in damages. (ECF No. 96 at 4, 8-9.) In addition, Urban argues that its consumer fraud claim is facially plausible because reliance upon GAF's actions need not be pleaded with particularity under Rule 9(b). (Id. at 8.) The Court ultimately agrees with GAF and grants its Motion as to its consumer fraud and deceptive trade practices claims.

Rule 9(b) provides that when a party alleges fraud, the party must “state with particularity the circumstances constituting fraud,” that is, “the who, what when, where, and how of the misconduct charged.” Becerra v. Dr. Pepper/Seven Up, Inc., 945 F.3d 1225, 1228 (9th Cir. 2019) (citation omitted); see also Depot, Inc. v. Caring for Montanans, Inc., 915 F.3d 643, 668 (9th Cir. 2019) (noting that “the complaint must include an account of the time, place, and specific content of the false representation as well as the identities of the parties to the misrepresentations”) (citations and quotation marks omitted). Rule 9(b) applies to state-law...