Westfield Ins. Co. v. Interline Brands, Inc.
| Decision Date | 19 December 2013 |
| Docket Number | Civil No. 12-6775 (JBS/JS) |
| Parties | WESTFIELD INSURANCE COMPANY a/s/o Insureds, Plaintiff, v. INTERLINE BRANDS, INC., et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
Daniel Hogan, Esq.
Kevin P. Smith, Esq.
Law Offices of Robert A. Stutman, PC
Attorneys for Plaintiff Westfield Insurance Company
Rachel Katherine Snyder von Rhine, Esq.
Marshall Dennehey Warner Coleman & Goggin
Attorney for Defendant Interline Brands, Inc.
George W. Wright, Esq.
Narinder S. Parmar, Esq.
George W. Wright & Associates, LLC
Attorneys for Defendant MTD (USA) Corporation
Ralph R. Smith, III, Esq.
Capehart Scatchard
-and-
Benjamin C. Sasse, Esq.
Tucker Ellis LLP
Attorneys for Defendants Watts Water Technologies, Inc. and
Watts Regulator Co.
Adam Brian Kaplan, Esq.
Susan Lynn Swatski, Esq.
Hill Wallack LLP
-and-
Denise Marie Montgomery, Esq.
Sweeney & Sheehan PC
Attorneys for Defendant Linx, LTD
I. Introduction
This action comes before the Court on Defendant Interline Brands Inc.'s second motion to sever and transfer filed November 18, 2013 [Docket Item 189]; Defendant Linx, LTD's motion to compel arbitration filed May 15, 2013 [Docket Item 77]; and Defendant Watts Water Technologies' motion for summary judgment filed May 15, 2013 [Docket Item 75].
Plaintiff Westfield Insurance Company brings the underlying tort claims on behalf of four insureds for property damages allegedly sustained by faulty toilet water supply lines. The Court heard oral argument on September 20, 2013 regarding nine motions and subsequently allowed a period of expedited jurisdictional discovery. This Opinion addresses the threemotions remaining before the Court.
For the reasons discussed below, the Court will deny Linx's motion to compel arbitration and Interline's motion to sever and transfer. The Court will grant Watts Water Technologies' motion to dismiss for lack of personal jurisdiction.
II. Background
This action is an insurance subrogation action brought by Plaintiff Westfield Insurance Company ("Plaintiff" or "Westfield") on behalf of four insureds who suffered property damage due to allegedly faulty toilet supply lines manufactured and distributed by Defendants: Interline Brands, Inc. ("Interline"); MTD (USA) Corporation ("MTD"); Watts Water Technologies ("WWT"); Watts Plumbing Technologies (Taizhou) Co., LTD ("WPT"); Watts Regulator Co. ("Watts Regulator"); Linx, LTD ("Linx"); and Everlotus Brands, Inc. ("Everlotus").1 The property damage at issue occurred in three separate states and caused Plaintiff to make payments to its insureds of at least $199,000.2
Plaintiff's Amended Complaint filed October 8, 2013 asserts claims for negligence, failure to warn, breach of warranty, strict liability, and fraudulent concealment, as well New Jersey Product Liability Act violations. [Docket Item 162.] Specifically, Plaintiff alleges that Defendants designed, manufactured, and distributed DuraPro brand toilet supply lines that had defective polymeric coupling nuts, which cracked and caused water damage to insureds' property. Plaintiff contends that each insureds' property damage was caused by the same product defect, i.e., cracking of the polymeric coupling nuts.
There are, however, different manufacturers and distributors connected with the various toilet supply line products. In the present action, the parties agree that two distinct chains of manufacture and distribution are at issue. One involves toilet supply lines with "winged" coupling nuts allegedly manufactured by Everlotus and distributed by MTD. The other involves toilet supply lines with "ribbed" coupling nuts allegedly manufactured by WPT and distributed by Linx and Interline and/or Watts Regulator.
Defendants MTD and Interline are incorporated in New Jersey.3 The remaining defendants are incorporated in other states and maintain principal places of business outside NewJersey.4 WPT is a Chinese corporation with its principal place of business in China. According to WWT, WWT is a holding company and Watts Regulator is WWT's wholly-owned subsidiary. WPT is a wholly-owned subsidiary of Watts Regulator.
Nine other insurance subrogation actions involving faulty toilet supply lines have been filed in Atlantic County Superior Court against these Defendants.5 There is an application for centralized management pending before the New Jersey Administrative Office of the Courts regarding the nine state court actions.
The procedural background of this case is complex and warrants a thorough recounting. This action was initially filed in Atlantic County Superior Court. WWT, WPT, and Watts Regulator (collectively "Watts Defendants") removed pursuant to 28 U.S.C. § 1441(b) on the basis of diversity jurisdiction. [Docket Item 1 ¶ 4.] The Court issued an Opinion and Order on March 25, 2013, denying Plaintiff's first motion to remand, finding that theaction was properly removed on the basis of diversity jurisdiction. [Docket Items 49 & 50.]
On September 20, 2013, the Court heard oral argument regarding nine motions: Plaintiff's second motion to remand filed July 19, 2013 [Docket Item 106]; Defendant Interline's motion to sever, dismiss, and transfer filed May 15, 2013 [Docket Item 74]; Defendant WWT's motion for summary judgment filed May 15, 2013 [Docket Item 75]; Defendant WPT's motion for summary judgment filed May 15, 2013 [Docket Item 76]; Defendant Linx's motion to dismiss for forum non-conveniens or alternatively to compel arbitration filed May 15, 2013 [Docket Item 77]; Defendant Watts Regulator's motion for summary judgment filed May 15, 2013
[Docket Item 78]; Defendant WWT's motion to dismiss Defendant MTD's cross-claims filed May 28, 2013 [Docket Item 83]; Defendant WPT's motion to dismiss Defendant MTD's cross-claims filed May 28, 2013 [Docket Item 84]; and Defendant Watts Regulator's motion for summary judgment on Defendant MTD's cross-claims filed June 6, 2013 [Docket Item 94].
In an Opinion and Order dated October 1, 2013, the Court denied Plaintiff's second motion to remand based on the Colorado River abstention doctrine. [Docket Items 157 & 158.] The Court addressed the other eight motions in a separate Order of the same date. [Docket Item 159.] The Court dismissed Defendant Interline's motion to sever, dismiss, and transfer and Linx'smotion to dismiss for forum non-conveniens without prejudice because the parties briefed state, not federal, law regarding severance, transfer, and forum non-conveniens. The Court allowed the parties 30 days to refile. The Court granted Defendant WPT's motion for summary judgment and motion to dismiss Defendant MTD's cross-claims because Plaintiff conceded at oral argument that WPT, which is a foreign corporation, had not been properly served in accordance with the Hague Convention. Accordingly, WPT was terminated as a party. The Court continued Defendant WWT's motion for summary judgment [Docket Item 75] and motion to dismiss Defendant MTD's cross-claims [Docket Item 83] pending further expedited discovery regarding WWT's contacts with New Jersey relevant to the Court's exercise of personal jurisdiction.
The Court also continued Defendant Linx's motion to compel arbitration [Docket Item 77] pending further expedited discovery to clarify the arbitration rules that would apply if the Court compelled arbitration for the arbitration agreement signatories: Plaintiff, Linx, WWT, WPT, and Watts Regulator. The Court dismissed as premature Defendant Watts Regulator's motion for summary judgment [Docket Item 78] and motion for summary judgment on Defendant MTD's cross-claims [Docket Item 94] pending resolution of Defendant Linx's motion to compel arbitration.
On October 8, 2013, Plaintiff filed an amended complaint, seeking declaratory judgment against the Watts Defendants forjoint venture and alter ego liability.6 [Docket Item 162.] Defendant Linx's Answer to Plaintiff's Amended Complaint also seeks declaratory judgment on these grounds.7 On October 16, 2013, after Plaintiff and WWT submitted a "stipulation of dismissal," the Court entered an Order dismissing Plaintiff's claim against WWT without prejudice to refiling by Plaintiff or Defendants pursuing their cross-claims against WWT. [Docket Item 170.] On October 23, 2013, the Court signed a consent order dismissing with prejudice Defendant MTD's cross-claims against the Watts Defendants. [Docket Item 180.]
On October 28, 2013, the Court conducted a telephone hearing to clarify the scope of expedited jurisdictional discovery permitted by the Court's October 1, 2013 Order. In an Order dated October 29, 2013, the Court denied Linx's request for further jurisdictional discovery on its theory that WWT is an alter ego of Watts Regulator or WPT as beyond the scope of the limited discovery contemplated by the Court's October 1 Order. [Docket Item 184.] The Court denied Linx's request without prejudice to Linx arguing for such a basis of personal jurisdiction and without prejudice to pursuing a theory of alter ego liability on the merits.
Remaining before the Court are Defendant Interline's second motion to sever and transfer filed November 18, 2013 [Docket Item 189]; Defendant Linx's motion to compel arbitration filed May 15, 2013 [Docket Item 77]; and Defendant WWT's motion for summary judgment filed May 15, 2013 [Docket Item 75].
III. Motion to Compel Arbitration by Linx
Defendant Linx filed a motion to dismiss for forum non-conveniens or alternatively, to compel arbitration on May 15, 2013. This motion was opposed by Plaintiff in its entirety.8 Pursuant to the October 1, 2013 Order, the Court permitted the parties to take the deposition of Tim McKernan, Manager of Quality, Training, and Forum Rules for Arbitration Forums, Inc. to clarify the arbitration forum rules applicable if the Court compels arbitration as to the signatories of the arbitration agreement. Following McKernan's deposition on October 14, 2013, Linx, Plai...
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