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In re Atlas Roofing Corporation Chalet Shingle Products Liability Litigation

United States District Court, N.D. Georgia, Atlanta Division

June 17, 2015

ATLAS ROOFING CORPORATION, Defendant. PENNY SEABERG on behalf of herself and all others similarly situated, Plaintiff, No. 1:13-md-2495-TWT Civil Action No. 1:14-CV-3179-TWT


THOMAS W. THRASH, Jr., District Judge.

This is a multi-district action arising out of the marketing and sale of allegedly defective roofing shingles. It is before the Court on the Defendant Atlas Roofing Corporation's Motion to Dismiss [Doc. 173] Count III, Count IV, Count V, Count VI, Count VII, and Count VIII of the Plaintiff Penny Seaberg's Complaint. For the reasons set forth below, the Defendant Atlas Roofing Corporation's Motion to Dismiss [Doc. 173] is GRANTED in part and DENIED in part.

I. Background

The Plaintiff Penny Seaberg is a purchaser of the Atlas Chalet Shingles ("Shingles"), which are designed, manufactured, and sold by the Defendant Atlas Roofing Corporation ("Atlas").[1] Atlas represented and continues to represent - in marketing material and on the Shingles packaging - that the Shingles meet applicable building codes and industry standards.[2] Atlas also provides a limited thirty-year warranty against manufacturing defects.[3]

The Plaintiff claims that the Shingles are defective due to a flaw in the manufacturing process. This process - which allegedly does not conform to applicable building codes and industry standards - "permits moisture to intrude into the Shingle which creates a gas bubble that expands when the Shingles are exposed to the sun resulting in cracking and blistering of the Shingles."[4] The Plaintiff filed suit in the U.S. District Court for the Southern District of Florida, [5] asserting claims for: violation of the Florida Deceptive and Unfair Trade Practices Act (Count I), breach of express warranty (Count II), strict products liability (Count III), negligent design (Count IV), fraudulent concealment (Count V), negligent misrepresentation (Count VI), and unjust enrichment (Count VII). The Plaintiff seeks damages, litigation expenses, and equitable relief.[6] The Defendant moves to dismiss Counts III, IV, V, VI, VII, and the Plaintiff's request for equitable relief.

II. Legal Standard A complaint should be dismissed under Rule 12(b)(6) only where it appears that the facts alleged fail to state a "plausible" claim for relief.[7] A complaint may survive a motion to dismiss for failure to state a claim, however, even if it is "improbable" that a plaintiff would be able to prove those facts; even if the possibility of recovery is extremely "remote and unlikely."[8] In ruling on a motion to dismiss, the court must accept the facts pleaded in the complaint as true and construe them in the light most favorable to the plaintiff.[9] Generally, notice pleading is all that is required for a valid complaint.[10] Under notice pleading, the plaintiff need only give the defendant fair notice of the plaintiff's claim and the grounds upon which it rests.[11]

III. Discussion

A. Injunctive and Declaratory Relief

The Plaintiff requests that the Court issue an injunction mandating that the Defendant:

1. "[N]otify owners of the defect, "[12]
2. "[R]eassess all prior warranty claims and pay the full costs of repairs, "[13] and
3. "[P]ay the costs of inspection to determine whether any Class member's Shingles needs replacement."[14]

The Plaintiff also requests that the Court issue a declaratory judgment stating:

1. "The Shingles [have] a defect which results in premature failure, "[15]
2. "[The Defendant's] warranty fails of its essential purpose, "[16] and
3. "Certain provisions of [the Defendant's] warranty are void as unconscionable."[17]

To begin, the Plaintiff's request for injunctive relief must be dismissed. Injunctive relief is only appropriate "when [a] legal right asserted has been infringed, " and there will be irreparable injury "for which there is no adequate legal remedy ."[18] Here, the Defendant argues - correctly - that the Plaintiff's allegations do not establish that legal remedies would be inadequate. Monetary damages would sufficiently compensate the Plaintiff for the Shingles that have blistered and/or cracked.[19] In response, the Plaintiff argues that she is allowed to plead alternative and inconsistent claims.[20] But the problem here is not that the Plaintiff's request for injunctive relief is inconsistent with her other claims, it is that she has failed to state a plausible claim for injunctive relief to begin with.[21]

To receive declaratory relief, however, the Plaintiff does not have to establish irreparable injury or the inadequacy of legal remedies.[22] In moving to dismiss the claim for declaratory relief, the Defendant first argues that the Plaintiff does not have standing because the requested declarations will not redress her injury.[23] To satisfy the constitutional case-or-controversy requirement, "[a] plaintiff must allege personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief."[24] The Plaintiff may establish redressability if she shows that the "practical consequence" of the declaratory relief "would amount to a significant increase in the likelihood that the [Plaintiff] would obtain relief that directly redresses the injury suffered."[25] Here, the requested declarations - e.g., that the Shingles are defective - would make it more likely that the Plaintiff would obtain the necessary relief from the Defendant because it would establish an essential component to liability. And although the Plaintiff's remaining claims may provide more direct relief, the Declaratory Judgment Act allows plaintiffs to seek a declaration of rights "whether or not further relief is or could be sought."[26]

Finally, the Defendant argues that the Plaintiff's declaratory judgment claim must be dismissed because it abridges the Defendant's right to a jury trial.[27] But as the Eighth Circuit Court of Appeals has explained, "[a] litigant is not necessarily deprived of a jury trial merely because it is a party to a declaratory judgment action... if there would have been a right to a jury trial on the issue had it arisen in an action other than one for declaratory judgment, then there is a right to a jury trial in the declaratory judgment action."[28] Accordingly, the Plaintiff may pursue her claim for declaratory relief for now.

B. Unjust Enrichment

The Defendant argues that the Plaintiff cannot establish an unjust enrichment claim given her allegation that there is an express warranty concerning the Shingles. Florida courts have held that "a plaintiff cannot pursue a quasi-contract claim for unjust enrichment if an express contract exists concerning the same subject matter."[29] Here, the Defendant correctly points out that "[a] warranty, whether express or implied, is fundamentally a contract."[30] Consequently, based on the allegations in the Complaint, the Plaintiff has not stated a plausible unjust enrichment claim. In response, the Plaintiff first argues that she ought to be allowed to pursue her unjust enrichment claim since she may not prevail on her contract claim. But the Plaintiff may only prevail on an unjust enrichment claim in the absence of a contract, not just in the absence of a successful contract claim .[31] The Plaintiff then argues that she is stating her unjust enrichment claim in the alternative. But "[u]njust enrichment may only be pleaded in the alternative to a breach of contract claim where one of the parties asserts that the contract governing the dispute is invalid."[32] Because both parties acknowledge that there is a valid warranty, the Plaintiff's unjust enrichment claim should be dismissed.[33]

C. Strict Products Liability, Negligent Design, Fraudulent Concealment, and Negligent Misrepresentation

The Defendant argues that the Plaintiff's claims for strict products liability, negligent design, fraudulent concealment, and negligent misrepresentation are barred by the "economic loss rule." Florida courts have adopted the economic loss rule in the context of products liability torts "to protect manufacturers from liability for economic damages caused by a defective product beyond those damages provided by warranty law."[34] It is "a judicially created doctrine that sets forth the circumstances under which a tort action is prohibited if the only damages suffered are economic losses."[35] Economic losses are defined as "damages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits - without any claim of personal injury or damage to other property."[36] Here, the Plaintiff only adequately alleges an injury to the Shingles themselves. Although the Complaint contains a vague allegation that other property was damaged, [37] a party must do more than "tender[ ] naked assertion[s] devoid of further factual enhancement."[38]

In response, the Plaintiff argues that "negligent misrepresentation and fraudulent inducement/concealment claims [are] exceptions to the economic loss rule."[39] The Florida Supreme Court has stated that "[w]here a contract exists, a tort action will lie for either intentional or negligent acts considered to be independent from acts that breached the contract."[40] However, "[m]isrepresentations relating to the breaching party's performance of a contract do not give rise to an independent cause of action in tort, because such misrepresentations are interwoven and indistinct from the heart of the contractual agreement."[41] When "the only alleged misrepresentation concerns the heart of the parties' agreement, simply applying the label of [fraud] to a cause of action will not suffice to subvert the sound policy rationales underlying the economic loss doctrine."[42] Indeed, "[t]o hold otherwise would allow the economic loss rule to be manipulated such that any time a purchaser received a defective product that did not cause any injuries or damage to other property, such a purchaser could assert claims for negligent and fraudulent concealment regarding the defect to avoid the economic loss rule."[43] Here, the relevant representations - whether express or implied by the Defendant's silence - are certainly related to the Defendant's obligation under the contract: to provide Shingles that meet the stated standard of quality.[44] Thus, because "[a]ll of the allegations that Plaintiff uses to support [her] claims for... fraudulent concealment... and negligent misrepresentation relate to whether Defendant adequately performed under the contract-that is, whether Defendant breached the agreement by providing... defective [Shingles], "[45] the Plaintiff's fraudulent concealment and negligent misrepresentation claims must be dismissed. In addition, the Plaintiff's strict products liability and negligent design claims must be dismissed as well.[46]

IV. Conclusion

For these reasons, the Court GRANTS in part and DENIES in part the Defendant Atlas Roofing Corporation's Motion to Dismiss [Doc. 173].


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