Marvin Lumber & Cedar Co. v. PPG Industries, Inc.

Minnеsota, Amicus on Behalf could not be implicated not thus Appellant. is not Because this conclusion violated. existing Supreme under

unreasonable No. 99-1424. relief is not avail- precedent, habeas Court Appeals, United States Court ground.6 able to Evans on Eighth Circuit. Nov. Submitted: 1999.

IV. Aug. Filed: substituting The District Court erred of the evidence for the Iowa Su- its view view of it. We

preme Court’s reasonable adjudica- that the Iowa state courts’ hold claim Fifth Amendment tion Evans’s applica- involved neither an unreasonable as determined tion of federal law nor Supreme of the United States Court determination of fact and unreasonable that, may relief not be accordingly, habeas ground. on this reverse the

granted We grant District of habeas relief on Court’s Fifth Amendment claim and re- Evans’s give oppor- the District Court an mand tunity remaining review four Evans’s claims, yet Dis-

habeas reached trict Court. AND

MARVIN LUMBER CEDAR COMPANY; Marvin of Ten Windows nessee, Inc., Plaintiffs-Appellants,

v. INDUSTRIES, INC., PPG Defendant Party Plaintiff-Appellee, Third America, Elf Atochem North Party Third Defendant. attached, "freely Supreme reasonably custody” and Miranda Evans 6. The Iowa Court also Evans, concluded, alternative, rights.” voluntarily Ev- waived those in the that even if at 764. ans could be considered to have been "in WOLLMAN, Before Chief LAY Judge, BOWMAN, Judges. Circuit BOWMAN, Judge. Circuit Marvin Lumber and Cedar Co. and Tennessee, (col- Marvin Windows of Inc. “Marvin”) lectively filed a multicount suit (“PPG”). Industries, against PPG Inc. The District Court dismissed several granted counts and summary judgment in favor of PPG on the rest. Marvin appeals, and we affirm part and in part. reverse

I.

The companies Marvin are Minnesota corporations and Tennessee that manufac- doors, ture and sell custom-made wooden windows, products. and other construction sells, among things, PPG makes and preservatives, primers, coatings. wоod and The dispute pur- here arose from Marvin’s chase preservatives of wood from PPG for in treating use its windows and doors. decades,

For several Marvin treated its products preservative wood with a contain- ing pentachlorophenol, called Penta for short, in preventing pre- which is effective decay mature wood rot and caused penetration. moisture Penta had draw- backs, including toxicity, starting and 1970s, the late alternative wood treatments began emerge. PPG makes such a “PILT,” treatment called for which stands “preservative in line treatment.” purchased and used PPG’s PILT 1988, along from 1985 to with other PPG products primers topcoats. such as 22, 1994, April On filed this suit. complaint legal asserts the- numerous ories, but, ultimately, allegation the central Henry Boyd, Minneapolis, Thomas products did not Mar- PPG’s meet (Robert Minnesota, Weinstine, argued R. expectations preventing vin’s wood rot Tourek, Brown, Steven C. and Donald J. and deterioration in Marvin’s doors and brief), appellant. on the for there are thirteen Specifically, windows. Nilan, Minneapolis, legal Complaint: Michael T. Minneso- theories in the Amended (Brian ta, (I) contract; (II) (III) Johnson, argued Jeffrey warranty; N. J. express (IV) Weill, Heying, implied warranty merchantability; Johnson Elizabeth brief), Wright, H. appel- implied warranty particular David on the for of fitness for a (V) (VI) purpose; negligence; lee. strict liabili- (VII) action, diversity As a this case ty; misrepresentation; fraud and (VII-XII) anti- governed by violations of several state state substantive law. See (XIII) statutes; 64, 78, fraudulent con- Tompkins, Erie R.R. v. 304 U.S. (1938). 817, 82 L.Ed. 1188 cealment. S.Ct. Where uncertain, the state law is our task is to background of the case procedural predict supreme how the state court would complicated. We recite is somewhat if with it. resolve the issue faced necessary purposes our here. On Packing v. Anchor Jackson 17, 1995, the Court dis- March District (8th Cir.1993). for the Except claims, statutory fraud missed Marvin’s of action based on Tennessee stat causes having pled been prejudice, without utes, applied the District Court Minnesota particularity. with insufficient The same parties argue law and the do not for the decision also dismissed Marvin’s tort Here, application any other. we review claims, including sounding in com- those all of the District Court’s determinations fraud, they related to mon-law insofar as novo, considering all in the de evidence Marvin, by damage to the sold light to Marvin on sum most favorable economic loss doc- based on Minnesota’s and, mary regard judgment issues complaint trine. Marvin filed another dismissals, 12 accepting the Rule com 13, 1995, Magistrate Judge on October plaint’s allegations factual as true and con Report sug- issued a and Recommendation struing light them in the most favorable to statutory gesting that the common-law plaintiff. the- See Anderson v. Franklin Complaint fraud claims the Amended (8th Mo., 1125, County, dismissed, and the District so or- Court Cir.1999). 31, 1995. Marvin then dered on October statutory sought change and obtained a legislature. Relying

from the Minnesota II. change, on this Marvin the District asked (U.C.C.), The Uniform Commercial Code An- Court to revise its earlier decisions. Minnesota, Ar- adopted in establishes that Recommendation, Report dated brought ticle contract claims must be 6, 1998, August suggested denial of such years four of their within accrual. See also, motions, revision and on rec- PPG’s 336.2-725(1) (1998). § Minn.Stat. Ordi- summary judgment against ommended nary accrue generally claims remaining Marvin on the claims. The Dis- delivery. upon tender of See id. 336.2- Judge’s trict Court adopted Magistrate 725(2). delivery Marvin last took of PPG’s judgment recommendations and entered product December 1988 and failed to file 15, 1999, January although for on PPG years suit until April almost two too adopt reasoning Report did not might late. Two circumstances allow the entirety. and Recommendation in its timely: fraudulently claims as if PPG con- Marvin Lumber & Cedar v. PPG In- Co. cealed from Marvin or if its breach PPG (D.Minn.1999). dus., Inc., 34 F.Supp.2d 738 expressly perfor- warranted the future claims, Seeking reinstatement of Mar- its products. mance of its We believe there is timely vin appealed. has jury question as to the existence of There are three central issues in this performance warranty. future First, appeal. we must decide whether Marvin’s contract claims are barred A. Second, governing statute of limitations.

we alleges must decide whether Minnesota’s eco- Marvin that PPG fraudu lently forming nomic loss doctrine PILT bars Marvin’s tort concealed the defects action, Finally, claims. Mar- we decide whether of Marvin’s causes of basis protected by vin is state statutes which would toll the statute limitations statutory which it bases its fraud claims. until Marvin discovered or had a reason- have known of the facts that make the concealed should to discover opportunity able up Hydra-Mac, cause of action. See Inc. v. Onan Hydra-Mac, defects. See (Minn.1990). at 919. Because Marvin N.W.2d N.W.2d Corp., 450 supplied any has not evidence of the neces must show that PPG prevail, Marvin To acts, sary fraudulent we need not reach very “the existence fraudulently concealed inquiry. the second the cause of of the facts which establish “actually Marvin was un- action” and that attempting to make out a triable of these facts. Id. at 918-19. aware” concealment, case of fraudulent Marvin re faсt, disputes summary these are Since many peats general of its contract and a rea- judgment appropriate where claims, alleging misrepre that PPG juror could not find fraudulent sonable sented PILT’s effectiveness and also that concealment. See Miles A.O. Smith that, made misrepresentations PPG while Prods., Inc., Harvestore directly vouching effective PILT’s (8th Cir.1993). found The District Court ness, support example, tend to it. For the evidence in the record does not alleges that PPG misled fact on genuine create a issue of material long-term about research supporting concealment. See Marvin fraudulent effectiveness, PILT’s about PILT’s certifi F.Supp.2d at 755. Lumber & Cedar industry organiza cation standards agree. We tion, changes in about the formulation and manufacturing process during for PILT Marvin’s ordi substance of it, bought the time Marvin and about the nary warranty claims is that warrant PPG PILT similarity type between the sold adequately prevent ed that PILT would type to Marvin and the sold to well- rot, wood but the failed. first competitor. misrepre known All these question critical therefore is whether PPG sentations, Marvin alleges, fraudulently fraudulently PILT’s fail alleged concealed prevented learning Marvin from that PILT prevent prod ure to rot in Marvin’s wood failing. argument Marvin’s fails be ucts. Acts that can constitute fraudulent cause, fraudulently even if made such PPG outright misrepresen include concealment representations, those acts do not consti tations, see Hines v. A.O. Smith Harve tute fraudulent concealment of Marvin’s Prods., Inc., 995, store 880 F.2d 998-99 ordinary warranty claims. (8th Cir.1989) law), or (applying Missouri In to disclose when a Two cases are illustrative. both failures information Miles, duty present, plaintiffs of disclosure is such as a Hines and sued the fiduciary relationship, Appert, particular see manufacturer of а model of Cohen v. 787, allegedly pro- 463 elevator that failed to (Minn.Ct.App. grain N.W.2d 790-91 1990). In duty promised. No such disclosure arises tect its contents as both cases, arms-length from the defendant raised a statute of limi- transactions of Hines, parties plaintiff here. Bank tations In Metropolitan See Fed. defense. Co., 1257, that, alleged v. W.R. Grace & 999 F.2d 1261 inherent and known while (8th Cir.1993). Misleading partial design disclo defects were the cause ele- failure, sures, however, may constitute affirmative vator’s the seller misled Hines fraud, Servs., Family fooling believing prob- see M.H. v. Caritas him into that (Minn.1992), seals, faulty 288 lem was which could be N.W.2d concealment, fixed, attempted repair to fraudulent see Iverson v. and the seller genuine that a Appliance Johnson Gas the seals. This Court held (8th Cir.1999) of material fact existed as to fraud- (discussing independent issue concealment). Hines, F.2d tort of fraudulent If ulent concealment. See there Miles, alleged plaintiff is evidence that PPG undertook fraudu at 998. acts, lently by continu- concealing question the second that the defendant misled her of the elevator ally extolling would be whether Marvin still knew or the virtues material, accusations all the while faced with in printed model Marvin that failing, not work. This PILT was PPG told that elevator did knowing that Marvin’s construction did not con- believed that this conduct PPG Court held time, At were to blame. practices concealment. See fraudulent stitute sup- which Miles, had information both F.2d We noted PPG at 816. For efficacy. PILT’s impossible” ported for the and undercut would have beén “[i]t performance PILT’s for several gave example, the facts ‍‌‌​​‌‌‌‌​​​‌​​‌​​‌​​​‌‌‌​​​‌‌​​​‌​​‌‌​​​​‌‌​​‌​‌‍that defendant to conceal action, positive, had because other customers been to Miles’s cause rise many PILT yard.” laboratory produсed Id. tests of was in [Miles’s] “the evidence hand, Hines, satisfactory results. the other noting that On distinguished We results, into returned less favorable plaintiff “lulled” the tests defendant there some water tests. especially repellency with elevator some believing problems that the be, be, are not evidence of affirmative repaired. Id. at These facts could and would disclose, not duty fraud. Absent some here, required not PPG was present Marvin’s These demonstrate that cases of the facts that reflected inform Marvin allegations that PPG fraudu generalized Met- performance. on PILT’s poorly PILT’s effectiveness lently misrepresented Bank, F.2d at 1261. ropolitan Fed. concealment, not fraudulent do constitute certainly liability denial of alone PPG’s least Marvin still had access where concealment. See Grand fraudulent that would make out its cause of the facts Indus., Inc., Timpte Express Island times, At all Marvin had access to action. (8th Cir.1994) (applying Ne- very Mar each of the facts establish law). best, might At braska action, namely of contract vin’s breach wrong that PPG was prove able prevent PILT’s failure to rot on stating prac- that Marvin’s construction “The oral and written products. problem. in Marvin’s rot tices resulted representations Marvin on to [that relies] point can to no that But Marvin evidence argu concealment support [its] fraudulent representations about shows that PPG’s not, not, pre did and indeed could ment problem rot were the cause of Marvin’s discovering vent from [Marvin] Buchwald, v. fraudulent. See Haberle promises concerning the virtues of [PPG’s] 351, (Minn.Ct.App.1992) N.W.2d pass.” did not come to Klehr v. [PILT] (“Central concept to the of fraud is a (8th 231, Corp., A.O. Smith statement, act, or knowing and intentional Cir.1996) Minnesota law and an (aрplying duty refusal to act where a to act lies.” Hines, Miles, alyzing and Minnesota court)). Thus, Marvin’s (quoting trial cases), 179, 1984, aff'd, 521 117 S.Ct. U.S. claim fails. fraudulent concealment (certiorari (1997) granted 138 L.Ed.2d 373 only). To make out federal RICO claim B. claim, warranty Marvin need show performing prom that PILT was not warranty-of-future- turn Marvin’s We ised, relating and the facts to that claim U.C.C., a performance claims. Under the were not in in the logs PPG’s test warranty explicitly extending to future relationship relating documents to PPG’s exception an to the performance presents customers, rather those with but a of action normal rule as to when cause facts hands of Marvin and its were warranty of accrues. A cause for breach acts customers. None PPG’s such a does not accrue of action for breach up could have covered the relevant facts. until the breach is discovered or should alleging fraudu- have been discovered. See Minn.Stat. comes closest to 336.2-725(2). § by asserting alleges lent concealment that PPG that such warranty The District misled Marvin about the cause of Marvin’s a exists here. that, the evidence in this case problems. rot The record reflects Court concluded genuine dispute of ma- if present description implies does even respect fact of goods perform way terial existence will a certain in the performance Henson, of future Ray future. D. See The Law of judgment 7.16, (1985). § granted summary therefore to Sales at 334-35 A typical Vehicles, Lumber example PPG. See Marvin & Cedar is Western Recreational F.Supp.2d at 752-53. where promised the seller that its adhesive would buyer’s work on the new Filón vehi- An express warranty is created promise, cles. implicitly This while touch- “[a]ny affirmation of fact or promise made ing upon performance the future of the by the buyer seller to the which relates to adhesive, specifically did not refer to a goods part becomes of the basis future time and therefore explicitly did not § bargain.” Minn.Stat. 336.2- extend to future performance. See West- 313(l)(a). “It necessary is not to the cre Vehicles, ern Recreational 23 F.3d at 1553. express warranty ation that the sell This Court explicitness has restated the er formal use words such as Varrant’ or requirement variously. Economy ‘guarantee’ or that specif the seller have a Housing Prods., v.Co. Continental Forest ic intention make a warranty....” Id. Inc., (8th Cir.1986) (“The 805 F.2d 336.2-313(2). necessary Nor is it overwhelming weight authority requires promise or affirmation of fact to in buyer prove ... specifi- its seller document; corporated into a written oral cally warranted for a defined representations may express create an future.”) period of time in (applying warranty, even sophisticated between com law); Nebraska Murray v. R.W. Co. Shat- Marquette See, parties. e.g., mercial Wilson terproof Corp., Glass 697 F.2d cs., 579-80 Ele (8th Cir.1983) (“[T]he terms of the warran- (8th Cir.1980) (applying under Ar U.C.C. ty must unambiguously indicate that the law). kansas warranting manufacturer is per- the future Only a specific type express war formance of the specified peri- for a however, ranty, will suffice to alter time.”) law). od of (applying Missouri normal rule of accrual for breach of war having While never precise addressed the U.C.C., ranty actions. Under the the war case, issues in this raised the Minnesota ranty “explicitly must ] to future extendí courts appear majority to follow the performance goods,” Minn.Stat. jurisdictions in future-performance war- 336.2-725(2), buyer’s or else the breach ranty Nativity cases. See Church of of of warranty action accrues on tender of Inc., WatPro, 1, Our Lord v. 3 delivery. vigorously The courts have en (Minn.1992). forced the statutory explicitness U.C.C.’s The evidence in that suggests this case requirement. See Standard Alliance In representations PPG made several about dus., Co., Inc. v. Black Clawson 587 F.2d By deposition, PILT. William Jake 813, (6th Cir.1978) cases), 820 (collecting Marvin testified about statements made denied, 2032, cert. 441 U.S. 99 S.Ct. 60 Panchot, executive, Bob PPG (1979). L.Ed.2d 396 Implied warranties testimony, The Marvins’ which we must cannot, by nature, very explicitly their ex accept summary judgment as true for pur- tend to performance. future See Western poses, Chrysler Corp., see Carter v. 173 Vehicles, Recreational Inc. v. Adhe Swift (8th Cir.1999), alleges that sives, 1547, 1550-52 & n. Panchot made statements about PILT’s (9th Cir.1994) cases). (collecting long-term Specifically, effectiveness. Jake Moreover, express warranty testimony of Marvin’s asserts that Panchot present said, condition of without a among things: will out “[PILT] specific reference to future is not an last that It will out the win- [P]enta. last explicit warranty of performance, you future dows that have in [William Marvin] Thus, any good. of qualities prod- present It’s a better years. home at 26

your warranty based on Au- action for breach Report & Recommendation uct.” R”) (“R long expired. William representations at 108. these & gust different, testimony is somewhat representations But two of favorably that Panchot also asserts but time. Pan- refer to a future specifically to Penta’s performance PILT’s compared treated products that allegedly chot said protecting years of success twenty-plus long products as PILT would last with R Marvins’ home. See on the the windows Penta, allegedly also and he treated with to points also at Marvin & R 107-08. PILT with products treated said representatives PPG other statements on the than the windows longer would last superior comparable PILT was home, been treated with which had to state- Penta as well as performance to twenty-six already lasted Penta and had pre- touting PILT’s effectiveness ments appeared years. The District Court matters. venting wood rot similar explicitly these statements recognize that that, as a held The District Court performance future refer to the law, representa none of these matter insufficient they held that were goods, but warranty explicitly tions would constitute because accrual rule applicable to alter the performance. future extending to warranty.” length of “explicit there was no Co., Lumber & Cedar Co., & Marvin Lumber Cedar descrip regard to F.Supp.2d at 753. With Court also F.Supp.2d at 753. The District such as positive qualities, tions PILT’s finding that Magistrate Judge’s quoted wood rot prevents that PILT statements “impre Penta was too performance Penta, than product” a “better or is Id. cise benchmark.” [a] descrip that such concluded District Court they did not inadequate because tions were argue that a war appears PPG future. See id. explicitly refer valid can be ranty performance of future comparison to Penta’s regard With in a number of length if is stated Judge noted Magistrate longevity, only statutory support for years. The record, that, expected “the based contention, that a requirement such millwork, which had been treated life of warranty per extend to future “explicitly Penta, anywhere twenty from formance,” weight cannot bear R at 109. The District fifty years.” R & it. A places upon interpretation such an Court, Judge, following Magistrate fu obviously extend to the warranty may that Panchot’s statement concluded if the prоduct, of a even performance ture was thus that PILT would outlast Penta imprecise. length warranty coverage warranty “imprecise” to constitute a too product, “lifetime” of a A for the extending performance. to future explicitly a future example, is enforceable as & Marvin Lumber Cedar warranty. See Providence performance F.Supp.2d at 753. Ass’n v. Condominium Village Townhouse Corp., U.C.C.Rep. 24 undoubtedly cor Amurcon-Loudoun District Court was The (Va. Ct.1994) 864, (“ply Cir. Serv.2d 870 general representations rect that PPG’s roof’); for life of the wood would last about PILT do not constitute warranties Co., Conn.Supp. Elec. 28 Rempe v. General extending performance. to future Most (1969) 160, 577, unit (disposal 254 A.2d 578 alleged specifically statements do not lifetime”); during Thus, properly “would work refer future at all. for. exam Summers, PILT a James J. White & Robert S. representation a that ple, 11-9, Penta, § at 608- being Uniform Commercial Code than besides “better” (4th ed.1995); Economy Hous see also puffery, see Shaw unenforceable Ruffin (4th Co., (characterizing Indus., Inc., 294, ing 805 F.2d Cir. “explicit of house as 1998), reference to “lifetime” merely description is also time period”). argues reference to a future Obvi- PPG for affirmance of the Dis ously, may question there be fact about trict Court’s decision on an alternate be, may “lifetime” long ground how the relevant expressly PPG disclaimed —that imprecision but this cannot mean that a Magistrate warranties rot. explicitly ex- Judge’s Report lifetime does and Recommendation Rempe, tend the future. See 254 A.2d noted that “the written warranties (“What, if claim found proven, PPG, at 579 her between Marvin[ ] which are concretely, Record, ‘lifetime’ means terms evidenced in the are a pair of time, years or some other unit of will have warranties for topcoats and finishes.” R determination.”). to await a future Like- & R at 106 n. 31. These documents wise, case, may in this a question there against failures,” warrant “film integrity long products about how treated with Pen- such as “cracking, peeling, flaking.” [and] last, ta but that does not mean that Pan- This “film integrity” coverage excludes alleged chot’s statement that PILT-treated “cracking of the finish due to substrate products prod- movement”; would outlast Penta-treated failure or Magistrate explicitly ucts does not extend to the fu- Judge characterized this exclusion as performance ture of PILT. “expressly any disclaiming] warranties against R R rot.” & at 106 n. 31. Nei We conclude a genuine issue of Magistrate ther the Judge’s Report and material respect fact exists with to an ex Recommendation nor the District Court’s plicit warranty performance. of future opinion any argument by addressed PPG however, warranty, The existence of such Panchot, statements automatically would not make Marvin’s true, if even were legally inoperable be timely. Assuming claim that a future war they cause conflicted with a written dis ranty is of war present, breach claimer of warranties. Even if the sales ranty claim accrued when Marvin learned pointed brochure PPG constituted breach, or should have learned of the see a disclaimer of all rot regard warranties 336.2-725(2), § expires Minn.Stat. four PILT, ing which is far from clear on the 336.2-725(1). thence, years see id. us, charges record before Minnesota law begins statute of limitations run “[T]he construing express courts with war plaintiff ‘when the discovers or should have ranties and disclaimers as consistent discovered the defendant’s refusal or ina wherever reasonable. See Minn.Stat. bility to maintain the as warrant Moreover, § 336.2-316. does not PPG ” WatPro, ed’ 491 N.W.2d at (quot point to an integration clause the writ ing Supply Smith v. Union 675 P.2d might extinguish ten document that 333, (Colo.Ct.App.1983)); accord operation of an oral express warranty as Crestliner, Inc., Anderson v. 564 N.W.2d inconsistent with the written disclaimer. (Minn.Ct.App.1997) (holding Printing See St. Inc. v. Equip., Croix breach buyer occurred when seller told Corp., Rockwell Int’l rectify that seller would do no more to (Minn.Ct.App.1988). 880-81 We leave violation). alleged warranty There is evi- the matter for the District Court’s con dence the record that Marvin knew of sideration the first instance. We re problems some wood rot ject hyper-technical argument PPG’s evidence also reflects that Marvin and right challenge Marvin waived its and, problems PPG discussed the rot ulti- conclusion,” Magistrate Judge’s “factual mately, in gave PPG Marvin a “for- contained in a footnote discussing an en response requests mal” to Marvin’s tirely different issue. evidence, assistance. Based on this we jury conclude there is at question majority least We reiterate that the of vast as to whether or per- not Marvin’s future Marvin’s contract claims are the barred warranty timely. formance claims are of statute limitations. We conclude retroactively. apply intended to of a to the existence exist as questions fact explicitly has Supreme Court as Minnesota as well performance, future warranty of retroactiv of the statute’s question left the of claims of breach Marvin’s to whether Den- F. Co. v. Lloyd See Smith ity open. All the timely. are warranty Tal-Ez, n. 7 491 N.W.2d claims, of oth- including breaches (Minn.1992). course, would, be a That warranties, ten- upon accrued express er law, state unless retroactive question of years expired four delivery and der of lawsuit, constitutionаl application transgressed filing later, well before presumption boundaries. Given properly was summary judgment likely it most non-retroactivity, is claims. on those granted to PPG apply would not Supreme Court Minnesota v. retroactively. III. See Ubel the statute (Minn.1996); State, tort claims. turn to Marvin’s We (“No § law shall 645.21 see also Minn.Stat. that Minne determined The District Court retroactive unless construed to be all of doctrine bars economic loss sota’s by the manifestly clearly and so intended pre The doctrine tort claims. Therefore, statutory legislature.”). prod of a purchaser a commercial cludes and the common- are not relevant terms damages recovering economic uct from The District Court governs. law doctrine against tort actions through at least some Mar See made the same determination. product. or seller of the manufacturer F.Supp.2d at Cedar vin Lumber & Siempelkamp Corp. Superwood See 742-44. (Minn.1981), 159, 162 Corp., 311 N.W.2d Farms, Paquin Hapka v. see also already had dis- After the District Court (Minn.1990) (abandoning N.W.2d claims, per- Marvin fraud missed Marvin’s damage to exception for Superwood’s to amend legislature the Minnesota suaded par commercial as between goods” “other April 1998. The statutory law ties). judicially created The doctrine as follows: “This section amendment reads bar integrity U.C.C. protect interpreted to bar tort causes shall not be tort law from process; prevents gaining or fraudu- upon action based and risks allocation of costs altering the misrepresentation or lent or intentional Superwood, parties. negotiated Minn. limit for those actions.” remedies Marvin advances N.W.2d at 161-62. 604.10(e). is ex- § The amendment Stat. First, questions arguments. two pending all actions or plicitly retroactive to a commercial transaction whether this is enactment. We filed after the date of the economic loss meaning within Court, however, agree the District Second, asserts that doctrine. only pur- that since the 1998 amendment apply to does not economic loss doctrine interpretation of the ports to control the misrepresentation. fraud and intentional statutory version of the economic loss doc- case, trine, apply to this which it does A. exclusively by prestatutory governed ap- law. this case was on of Minnesota common While The common law legislature again peal, the Minnesota interplay between Marvin’s governs the U.C.C., statutory The statute claims, amended its law. economic tort misrepresentation transactions now allows common-law The relevant loss doctrine. “the long merchants so and 1988. The claims between place between 1985 took intentionally was made misrepresentation economic loss theretofore-common-law ch. recklessly.” 2000 Minn.Laws upon by the was not touched doctrine 604.10). (to § at Minn.Stat. until 1991. See be codified legislature Minnesota terms, amendment, applica- statutory by its no This 604.10. There is Minn.Stat. after only to transactions consummated enactment was ble indication that the 1991 1, 358, 1, August See id. ch. sec. argues Marvin that we should subdiv. 6. abandon Industries. In the recent Chief Foods, Jennie-O Inc. v. Prods. Safe-Glo B. (Minn.Ct. Corp., 582 N.W.2d 578-79 App.1998), the Minnesota Ap Court of The economic loss doctrine is peals, they do, rejected as are free to the application in its to commercial broadest majority Industries and instead fol Chief transactions, opposed as to consumer Judge Lay’s lowed dissent. Concluding ‍‌‌​​‌‌‌‌​​​‌​​‌​​‌​​​‌‌‌​​​‌‌​​​‌​​‌‌​​​​‌‌​​‌​‌‍Hapka, transactions. See at N.W.2d 336.2-104(1) § that Minn.Stat. does not 688. A transaction is commercial when supply a definition of goods “merchant of by dealing is sold “a merchant kind,” of Jennie-0 court found goods another with merchant in turkey that a farm operation was not a Lloyd kind.” F. Smith merchant with respect to heaters used in Regents 15. In Univ. Minn. v. of of Chief barns; brooding its the farm operation Indus., Inc., (8th Cir.1997), 106 F.3d 1409 clearly not a dealer in heaters. While recently analyzed we the Minnesota on law reject we are loath to the considered judg subject. University of Minnesota prior ment of a panel court, decision of our purchased grain had unit drying from law, our task is to apply state and while Industries, the unit allegedly Chief and decisions of the “various ap intermediate analyzing failed started a fire. After pellate us], [binding courts are not ... the Minnesota case law and Minn.Stat. they persuasive are authority, and we 336.2-104(1), we par concluded that “[a] must follow them they when are the best ty is thus a of goods pur ‘merchant’ evidence of what [state] law is.” Garnac (1) poses by of the U.C.C. either: dealing Grain v. Blackley, Co. (2) goods; in those by way special of (8th Cir.1991); accord Commissioner v. knowledge ized goods.” Id. at 1411. Bosch, 456, 465, Estate 387 U.S. 87 S.Ct. University Because the specialized had (1967) 18 L.Ed.2d 886 (stating that dryers, in knowledge grain including hav intermediate state court decisions should ing leading expert hired as a consultant be followed “unless federal [the court] is transaction, for the University was a persuasive convinced data that respect grain merchant with dryers, and highest court of the state would decide ap therefore the economic loss doctrine otherwise”). Obviously, opinions plied. at 1412. Judge Lay See id. dissent jurists scope reasonable differ on the ed, arguing for a interpretation nаrrower kind,” goods “merchant of making “merchant goods of the kind” that any prediction of the Minnesota Supreme included dealers at issue. Court’s ultimate view of the uncer matter See id. at 1413-15. case, tain. quali Marvin because Following majority Indus- Chief fies as a merchant of goods of the kind tries, the District Court determined that even under the more favorable standard Marvin is a merchant respect to win- Jennie-O, we need not decide whether coatings. Magistrate dow Judge rec- requires reject Jennie-0 us to In Chief rejecting ommended “attempt Marvin’s dustries. don the raiment of naive novitiates.” R & R at agreed, 78. The District Court not- preservatives. deals wood ing bargaining strength, long Marvin sells custom windows and doors history treatments, wood, of purchasing window made of and one component of that activity industry and its with an standard- is a preservative woodwork wood to ensure setting organization strong evidence of that the are long-last- windows doors specialized knowledge requiring this ing, bought PILT applied windows, conclusion. See Marvin Lumber & Cedar which Marvin sold. Marvin’s Co., 34 F.Supp.2d at 748. specialized knowledge, discussed fraud. See applies to intentional doctrine Court, Marvin’s combined with District Kemutec, Inc., 66 Corp. v. good Rich Prods. containing very the of a sales (re- (E.D.Wis.1999) 937, 977-80 PPG, F.Supp.2d us from convinces bought

that it concluding that fraud opinions and viewing the in PILT within dealer is a Inns, barred); Budgetel Inc. v. claims are doctrine con- economic loss meaning of the 722- F.Supp.2d Sys., set out Micros definition the narrower with sistent and (reviewing opinions Indus- Judge Lay’s (E.D.Wis.1999) and in Jennie-0 Chief fraud claims are concluding that they interpret the extent tries dissent barred). If the Minnesota. law of common the narrow as to were so of dealer definition Distributing Whirlpool AKA Co. prod- resold a who purchasers include (8th Cir.1998), panel a 137 F.3d 1083 Corp., distributor, unaltered, a or like broker uct issue, analyz- the addressed of this Court nearly would be loss doctrine the economic We noted that “count- ing Minnesota law. in common has little meaningless. Marvin ... the U.C.C. ... cases illustrate less Jennie-O, which turkey farm with the confirms, governing a com- presence heater, hypothetical busi- a bought nor preempts neither mercial contract dissent, see Judge Lay’s nessman Chief all fraud claims to the need for eliminates 5, who Industries, n. dealings may give rise.” parties’ which in his for use buys computers regularly (citing 336.2-721 Id. at 1086 Minn.Stat. are individuals consumers Those office. (“Remedies misrepresentation material for turkey a farm goods; to those respect with un- include all remedies available or fraud business, is the nor not in the heater is for nonfraudulent article der computer in the hypothetical businessman breach.”)). Therefore, AKA court fail, Thus, if those business. competing struck a balance between remedies. buyers may seek consumer think by concluding: “We considerations contrast, Marvin, in the business re- Supreme Minnesota Court would Where wood selling products. treated by holding in this case legal solve the issue knowl- sophisticated with manufacturer merchants, that, a fraud in a suit between incor- component purchases of a edge losses must be claim to recover economic product, component into its porates that it Article contract or independent of the merely a dealer manufacturer is a not the economic loss doc- precluded by but with product, to finished respect claims trine.” Id. at 1087. Actionable as well. component part respect representation “must be based on Thus, respect a dealer with Marvin was contract, outside of or collateral to eco-r in issue and the the transactions here induce- many claims of fraudulent such to limit Mar- operates nomic loss doctrine panel applied ment.” Id. at 1086. vin’s claims. it and concluded rule to the ease before arising alleged from an that fraud claims C. plaintiff “would be a dis- promise that the long time” were barred be- tributor for application of the economic Given contract, “duration was a term of the doctrine, cause negligence loss that term was the properly dis- and breach of basis liability claims were strict contract plaintiffs] [the also bars time-barred missed. Whether the doctrine contrast, claims, By claim.” Id. at 1087. how- misrepresentation fraud and ever, example, upon claims based the defendant’s controversial. For is more plans harmful failure to disclose business opinions questions have -been six these were “the of collateral plaintiff sort in the Eastern District of Wis- rendered subject independent can alone, support how the Wis- predicting consin each Thus, claim.” Id. the is- fraud-in-the-inducement Supreme consin Court will resolve by claim was not barred economic loss that fraud sues of whether and how the doctrine, though Here, economic loss did fail the District Court and the for other reasons. Magistrate Judge used the “quality and goods character of the sold” limitation to reasoning of AKA leads us inexora- find the fraud claims independent bly to the conclusion that Marvin’s fraud the contract accordingly barred. Un generally agree claims are barred. Courts doubtedly, all of Marvin’s fraud claims re inducement, that fraud in necessarily late to efficacy of the preserva wood contract, prior independent is tive, which is subject also the of Marvin’s by contract and therefore not barred warranty Considering claims. repre economic loss doctrine. A leading Michi- descriptions sentations or goods about may gan explains case as follows: express warranties, become see Minn.Stat. Fraud in presents spe- the inducement 336.2-313(1), it is clear here that Mar cial parties situation where to a contract vin’s fraud concerning claims representa appear negotiate freely nor- —which tions about PILT are not independent of mally would grounds constitute for in- the contract and therefore properly were voking the economic loss doctrine —but dismissed.1 in fact ability party where of one negotiate fair terns and make in- Marvin argues that reject we should formed decision by is undermined the AKA, as does the State of Minnesota as party’s other fraudulent behavior. instance, Amicus however, Curiae. In this Eng’g Huron Tool & v.Co. Precision Con there is no strong new indicating evidence Servs., sulting 365, Mich.App. 532 the Supreme Minnesota Court would find (1995). 541, N.W.2d Instead, otherwise. only Marvin can point jurisdictions. See, decisions in other concept, This which has been referred to e.g., Holdings, United Int’l Inc. v. an exception to the economic loss doc- Wharf Ltd., (Holdings) 1207, trine, Indeed, 1226-27 is non-controversial. the ex- (10th Cir.2000) law); AKA, (applying Colorado ception was approvingly cited Douglas-Hanson v. BF Co. F.3d at 1086. A Goodrich excep- limitation on this tion, 229 Wis.2d by announced Huron followed in (1999), courts, court, by equally more difficult. divided The Huron aff'd (2000). opined court Wis.2d 607 N.W.2d 621 cases “where the We only

misrepresentation by also note a recent academic the dishonest work written party quality concerns the Marvin’s counsel. character of the See Steven C. Tour sold,” al, Bucking the economic ek et loss doctrine “Trend”: The Uni Code, bars the frаud claims because the fraud Commercial the Economic form Doctrine, claims are redundant with substantially Loss and Common Laiu Causes Huron, warranty claims. 532 N.W.2d at Action Fraud and Misrepresenta for tion, (1999). 84 Iowa L.Rev. 875 This is and, so, argument 1. The dissent’s that Marvin’s fraud if the warranties became terms of the independent claims are Indeed, the contract contract between Marvin and PPG. astonishing. somewhat Ultimately, Marvin’s complaint alleges Marvin's the breach of ex- fraud claims all revolve around one central press warranties based array on the same vast allegation: PPG mislead Marvin into believ- representations up that make its fraud ing product, that PILT would be an effective however, explains, As claims. Part II because but PILT failed. The harms suit, long Marvin waited too to file most of not, inefficacy, arose from PILT’s for exam- those claims are now time-barred. ple, from PILT’s difficulties with certification. may yet winning warranty-of- have a recognizes, As parties the dissent commercial claim, future-performance but to allow Mar- may protect against themselves the risk of expired warranty vin to resurrect its other product Moreover, by securing failure warranties. through precisely claims tort would be out, pointed as we have PPG's al- kind of subversion of the U.C.C. that the eco- leged representations may have created ex- prevent. nomic loss doctrine is intended to press pursuant warranties to Minnesota law. apply refused Judge Magistrate insufficient, however, disregard us to he AKA, statutory it is amendment because when first especially our decision authority on an unconstitu- recent amount to line with other it would found Telecom, Inc. v. All-Tech obli- subject. See of the contractual impairment tionаl (7th 862, 866 Cir. PPG, Amway Corp., relying Marvin and between gations eases). 1999) (collecting the amendment on evidence to benefit specifically passed are the of data pieces Two other R & interests. of out-of-state expense statutory amendments recent to effect give If to R at 60-70. we were have deter We legislature. Minnesota by considering statutory amendments do not simply that the amendments mined similar, although more policy, them as here, which relevant to the apply conduct would be issues constitutional complicated, com by the Minnesota governed instead Shooting & Lake Fish- Cross present. Marvin inapplicable, Even if mon law. Cf. 639, Louisiana, 632, 224 U.S. v. ing statuto argue, the Club of Minnesota the State (1912) (stating 577, Minnesota’s 56 L.Ed. 924 demonstrate ry amendments 32 S.Ct. specific that, fraud and acts can violate policy only legislative general against while application of clause, that policy against expansive court decisions the contract that They suffice). assert loss economic doctrine. may legislation to effect” “give statutory policy should be considered Co., this Oil 511 Shell But see Mariniello v. loss economic applying common-law Cir.1975) in (3d (rejecting 853, 859-60 County v. Kampsen See doctrine. Jersey New clause claim where contract (Minn. 103, 106 441 N.W.2d Kandiyohi, effectively gave retroactive Supreme Court immemorial, 1989) (“Since the ab in time new common- by crafting force to statute a governing specifically aof statute sence statute). We avoid modeled after law rule struc issue, law courts have given common by refusing to questions the constitutional specific issue to resolve rules tured controlling inapplicable statutes give cov by analogizing to statutes them before Serv., v. Motоr Inc. weight. Spector matter.”); subject general ering the same 101, 105, 65 S.Ct. McLaughlin, 323 U.S. Lines, Moragne v. States Marine see also (1944) (discussing “deep- 152, L.Ed. 101 1772, 375, 390-93, 90 S.Ct. 398 U.S. courts doctrine that should ly rooted” (1970) (relying inappli on 26 L.Ed.2d issue unless questions constitutional avoid overruling com statutory rules cable “unavoidable”). ex contrary policy rule mon-law attempts to distin- statutes). however, Alternatively, Marvin Here, pressed by AKA does ground AKA the guish textually irrelevant statutes application under apply their sales of contracts tantamount to would be “policy” as court, true, gener AKA The law in of U.C.C. The application. retroactive Article al, particular, strong at was “a Minnesota law that the contract issue did note AKA, contract,” legislation. See disfavors retroactive Article ly type different Prods., U.S. Landgraf 3; v. USI Film distinction was at 1086 n. 244, 264, 128 L.Ed.2d 229 114 S.Ct. determining apply important whether Thus, Ubel, (1994); at 369. 547 N.W.2d statutory version the common-law Supreme Minnesota doubt we loss doctrine. AKA Minnesota’s economic by giving expand would statutes Court version, as do the common-law we applied their more effect than them retroactive why no reason simply offers here. Marvin requires. text at issue AKA the kind of contract differently under the be treated should AKA Similarly, if were to abandon we kind of law than contract amendments, common statutory because of meaningful in this case. issue Without akin to questions raise constitutional would distinction, controls. AKA The factual of the statutes. application the direct asserting it, § fraudulent con under In addition to Minn.Stat. 325F .69 before our mechanism, tolling cealment as conclusion that Marvin ais merchant with pleaded fraudulent concealment as an respect also to window quickly treatments dis- previously tort. have independent We poses of Marvin’s claim under that statute. proof that Marvin lacks concluded Ly Nystrom, See also tolling mecha fraudulent concealment (Minn.Ct.App.1999) (holding that proof merchants). lacks § nism. likewise protect 325F.69 does not claim, event, in any make out a tort language and reasoning of WatPro indistinguishable this tort claim is from clearly also sweep broadly enough to apply general fraud claim and is essen to a related Minnesota statute upon relied tially redundant of its claims. statute, by Marvin. Minn.Stat. conclude, We therefore as did the district 325D.13, § part of the Unlawful Trade court, see Marvin Lumber & Cedar Act, Practices is similarly designed pro- n. F.Supp.2d at 749 the facts tect consumers. See MinmStat. 325D.09 support independent will not tort (“The legislature of the state of Minnesota light of the economic loss This doctrine. hereby practices finds: that the trade de- law, conclusion is buttressed Minnesota prohibited fined and by sections 325D.09 to doctrine, independent of the economic loss 325D.16 ... mislead consumers as to the suggesting independent that such an quality, ingredients origin and of merchan- fraudulent concealment claim will not lie Thus, purchased....”). dise holdings where the fraudulent concealment relates Nystrom and WatPro teach that promisor’s to a duties under the contract. § apply protect 325D.13 does not to Mar- Contracting Corp. See Cherne v. Wausau vin in the circumstances of the transac- (Minn. Cos., Ins. 572 N.W.2d 345 n. tions involved this case. Ct.App.1997). statute, 325F.67, § The third MinmStat.

IV. essentially proscribes advertising. false WatPro, Prior to the Minnesota Court of finally statutory address We Marvin’s Appeals question addressed the of whether claims. Marvin seeks under three redress applied or not the statute where com statutes, Minnesota Minn.Stat. bought grain mercial farm on the 325D.13, 325F.67, 325F.69, silo §§ and as well basis false advertisements. The defen statutory as claims based on Tennessee argued only applied dants that the statute law. to consumers. See Kronebusch v. MVBA case, In the circumstances of this Sys., Harvestore protection the Minnesota consumer stat (Minn. Ct.App.1992). Concluding that apply utes do not to a merchant such issue, statute was “silent” that Kro- Supreme Marvin. The Minnesota Court nebusch court nevertheless concluded WatPro, addressed a similar situation in “applies pur the statute to the farmers as examining 1. In N.W.2d how consumer at chasers silos.” Id. 494-95. protection statutes can co-exist with the U.C.C., believe, however, court sharp ultimately drew a distinction We that the parties between commercial Supreme and consum Minnesota Court would find that § ers. id. at 7. plaintiff apply See Because the not to a MinmStat. 325F.67 does Marvin, church a “sophisticated was not merchant” merchant such as rea- several foremost, respect with to purchase question, sons. First and Kronebusch was WatPro, the court concluded that “[t]he transaction decided without the benefit of ordinary issue here is an significantly predictive consumer which undercuts its Second, scope transaction within the of state stat value. the facts of Kronebusch us; regulating present utes to consumers.” not precise sales Id. did issue before farmer, at 8. plaintiff, Since the WatPro court had a claim the while a commercial Marvin Lumber & Cedar repose. mer sophisticated as a not described (citing Tenn.Stat. at 755 grain F.Supp.2d to silos. respect chant with 47-18-110). only argues that § all com argue appeared defendant businesses) timely because fraudulent (i.e., claims are all enterprises mercial ticking to toll the operated concealment protections be outside should that no fact our conclusion Third, that Minnesota’s clock. Given it is clear statute. to the fraudulent con- de exists as primarily question advertising false statute claims, Mar- consumers, contract sophisti cealment of Marvin’s signed protect are clear- Indeed, statutory claims Minnesota’s vin’s Tennessee cated merchants. ly all three barred. recently described highest court at issue statutes of the Minnesota V. 325F.67, they

case, noting § including broadly very construed generally “are involving is a fact-intensive case This protection.” consumer State enhance law. We commend murky areas of state Morris, Philip Humphrey thoughtful analysis of thorough (Minn.1996). Thus, N.W.2d Magistrate District Court and several as much to applies reasoning WatPro with We affirm the District Court Judges. ‍‌‌​​‌‌‌‌​​​‌​​‌​​‌​​​‌‌‌​​​‌‌​​​‌​​‌‌​​​​‌‌​​‌​‌‍Fourth, § 325F.69. 325F.67 as does (III) (XIII). (I) counts We respect to — decision finally, only post-WdiPro however, reverse, respect to count courts to address of the Minnesota claim, (II), express warranty con- issue, opinion, unpublished albeit in an questions fact exist as to cluding that Huntting Co. v. Bi agrees. See Elevator performance future whether wer, C9-98-548, 1998 WL 747170 No. by and as to made to Marvin PPG 1998). Oct.27, Thus, we (Minn.Ct.App. timely. that claim is whether Su little that the Minnesota have doubt reach the same conclu preme Court would LAY, in Judge, concurring part Circuit sion. dissenting part. in Court, therefore, properly

The District majority’s exception the of the With statutory all the Minnesota dismissed of holding regarding Philip Morris case does not claims. The claims, in I which con performance future There, any contrary proposition. stand for cur, join majority opinion. I cannot the pursue court Blue Cross to allowed First, majority’s with the defini disаgree I Cross, consum- claims that clients of Blue goods a “merchant in of the kind” tion of by the cigarettes, ers of were defrauded Marvin. application and its of the term to manufacturers, cigarette defendant Second, disagree majority’s I Philip of Blue See Mor- detriment Cross. fraud and fraudu treatment of Marvin’s Here, ris, at 496. 551 N.W.2d lent inducement claims under the economic any made points no evidence that PPG respectfully I that loss doctrine. submit any consumer. misrepresentation analysis, majority ig throughout Moreover, Morris is a case about Philip principle a of federalism man nores basic standing, while WatPro concerns sub- Tompkins, in Erie R.R. v. 304 U.S. dated protection stantive reach of the consumer (1938), L.Ed. 1188 58 S.Ct. light in with the statutes of tension U.C.C. diversity deciding courts cases federal WatPro, 7-8; at also 491 N.W.2d see and not apply shall state substantive law (Simonett, J., concurring in rele- id. at 9 law interpretation their own of what the majority opin- vant how part) (explaining should be. statutory interpreting language).

ion is A. Merchant in Goods Kind of The District dismissed Marvin’s Court v. Regents the Univ. Minnesota statutory claims under Tennessee law of of (8th Indus., Inc., 106 F.3d 1409 Cir. four-year statute of based on state’s Chief Foods, 1997), In Jennie-O Inc. v. proper tackled the defini this court Safe-Glo (Minn.Ct. Corp., Prods. 582 N.W.2d 576 in the kind” for goods tion of “merchant App.1998), Appeals the Minnesota Court of applying the economic loss purposes made clear that state courts should follow § codified at MinmStat. 604.10. doctrine as in the dissent Industries. Industries, The Jen relying majority in Chief Chief rejected reasoning nie-0 court set “merchant” as on the U.C.C.’s definition of majority forth Industries 336.2-104(1), § held found Minn.Stat. Chief in years experience purchasing prod a goods in of the kind need that a merchant component uct brings special thеreof Rather, the goods. in like be dealer knowledge, thereby ized qualifying the that the merchant court found it sufficient purchaser as a “merchant” under “specialized knowledge had of the simply in goods U.C.C. and “merchant of the Indus., 106 F.3d at 1411. goods.” Chief kind” under the economic loss doctrine. in Industries relied on dissent Chief Instead, the Jennie-0 court decided to Den-Tal-Ez, Lloyd F. Smith Co. adopt apply the narrower definition of (Minn.1992), urge that a goods “merchant kind” as set who goods “merchant of the kind” is one forth Den-TaV-Ez and the Indus goods. is a dealer in the same The dissent Chief tries dissent. noted: Notwithstanding specific mandate of 604.10(a) § it enacted had

When the Minnesota of Appeals, Court the ma- desired, legislature it so the Minnesota jority rejected in this adopts case now could chosen the broad term “mer- have approach majority of the Industries generally chant” as defined 336.2- Chief applies the U.C.C.’s definition of “mer- 104(1) in goods instead of “merchants in determining chant” whether Marvin is a in- legislature’s the kind.” The choice merchant of the kind under incorporate limiting lan- stead to It Mar- Minnesota law. concentrates on in Den-Tal-Ez manifests guage [found ] “specialized knowledge” vin’s notwith- application its intent to narrow rejection standing Minnesota courts’ in- economic loss doctrine. There is no that standard. obvious, consistency clarifying in this 336.2-104(1). § in-

provision, with majority recognizes, As the federal § purpose tended of 604.10 was to over- courts must follow intermediate state court Hapka’s language, come broad based on decisions “unless federal is con- [the court] 336.2-104(1), ordinary § so consum- by persuasive vinced other data that the ers will not be denied their “economic decide highest court of the state would arising goods.” loss from the of sale v. otherwise.” Commissioner Estate of contrast, Bosch, 456, 465, In majority opinion the to- 387 U.S. 87 S.Ct. (1967). case, §

day limiting declares that 604.10 to In present L.Ed.2d 886 the majority dealers “would create an unwarranted reasons: § But inconsistency” with 336.2-104. sophisticat- a manufacturer with Where defini- incorporating 336.2-104’s broad knowledge component purchases ed of a regards goods tion of “merchant” as it of incorporates component into its (i.e., by just including the kind deal- mere- product, the manufacturer is a not occupation ers but or also others whose ly respect prod- a dealer with to finished employment gains of another them some uct, respect component but with to the goods) in specialized knowledge Thus, part as well. Marvin was a dealer majority very intent of contradicts the respect with here in transactions § 604.10. op- and the loss doctrine issue economic erates to limit Marvin’s claims. Indus., J., (Lay, 1413-14 Chief (footnotes omitted) (citations in with dissenting) reasoning This is not accordance omitted). Jennie-O, Minnesota law. a mer- Under v. in AKA Distrib. Co. Whirl law found the kind is not so charac- goods

chant in of (8th Cir.1998). I F.3d 1083 merely specialized pool Corp., its knowl- terized argue AKA equally untenable that our court in edge. respectfully It is submit (and, thus, a mer- a a dealer party Supreme Minnesota overlooked kind) because of goods in the chant in claims treatment of fraudulent Court’s knowledge product of a sophisticated its as of the economic loss doctrine the face component. in v. A.O. Smith Harve set forth Butter (Minn. Prods., Inc., analysis leads store majority’s erroneous 1994). Marvin, Furthermore, I sophisticat- respectfully with its submit it to hold that AKA, “in component part, is knowledge majority’s upon of a reliance ed that the selling prod- treated wood business proper prediction extent it is a state true that Marvin is ucts.” it is While law, misplaced. manufacture and sale engaged in the in Supreme Court first The Minnesota doors, in fit order to

windows and wooden doctrine in the economic loss Su troduced majority overstates purposes its own Siempelkamp Corp., 311 perwood Corp. v. the nature of Marvin’s business. (Minn. 1981), on oth N.W.2d 159 overruled lumber, it in raw does not does not deal Farms, Paquin grounds, Hapka er likewise, and, it does glass, in plate deal (Minn.1990), from borrowing N.W.2d 683 In preservatives. in wood not deal in Supreme the California Court’s decision PPG, Marvin is a con- relationship with Seely v. Motor 63 Cal.2d White preservatives uses wood simply sumer who bank). (1965) (in Cal.Rptr. 403 P.2d 145 in part its windows. Un- component as a later, Butter, Nearly years thirteen rationale, every manu- majority’s der the tort claim again court was faced with a buys widget who a order to facturer (this claim) allega time a fraud based on always will manufacture discussing tions of economic loss. who deals deemed to be merchant case, procedural history of the the court no widgets. There is law Minnesota took note of the district court’s dismissal position.2 supports elsewhere which plaintiffs’ negligence liability and strict such, a merchant Marvin is not As of the economic loss kind, and, claims on the basis in accordance doctrine, Deiv-Tal-Ez, permit as as its decision to economic loss doctrine well alleging plaintiffs’ go from fraud claim to forth. prevent should not property passing as a result of much mention of damages Without so doctrine, the defective PILT. the economic the Minnesota loss viability Supreme considered the Court Misrepresentation B. Fraud and Thus, implicitly the fraud claim. the court recognized that the fraud claim could be majority misrep- all fraudulent bars if had tried that parties maintained the the Article independent resentations not by By issue consent. all appearances, Minnesota’s economic contract under simply Butter court assumed that an action not on loss doctrine. It does so the basis law, in common law fraud in Minnesota was not upon another court of Minnesota but appeals panel’s prediction of Minnesota subsumed the economic loss doctrine. majority supports position by a dealer in PILT is the same as 2. The its stat- is ing: of dealer were so nar- saying pesti- "If the definition a fruit vendor is a dealer in the purchasers only who resold row as to include crop. Surely, cides to treat such a used its unaltered, product like a broker or distribu- understanding broad of the word "dealer” tor, loss doctrine would be economic Although part stand. the PILT is cannot nearly meaningless.” my position It is not relationship product, its to the the finished products unaltered that those who resell product sufficiently essence of the finished Rather, qualify as dealers. one must consider prevent qualifying attenuated to Marvin from relationship product pur- between the as a dealer. say chased and the sold. To that 604.10(e), ex- which N.Y.2d 510 N.Y.S.2d 502 N.E.2d Minnesota Statute (1986): that fraud claims are not plicitly states doctrine, under the economic loss

barred damages measure of recoverable for merely restates and codifies Minnesota being fraudulently induced to enter into basis, common law. On this Marvin makes a contract which otherwise would not in AKA strong argument that this court have indemnity been made is for the loss misapplied making Minnesota law through suffered inducement. focusing this prediction. Insteаd jury Here the was properly allowed to AKA, however, inherent weakness award damages to defendant on the holding ques- majority adopts its without [fraudulent inducement] counterclaim tion. This is error. for the goods, costs to locate the repurchase

costs to the goods, storage costs, fees disposal and under the C. Fraudulent Inducement to Contract [breach contract] counterclaim for the setting Butter and its effect Even aside remaining balance due purchase on the law, I prediction on AKA’s of state find price for the sold and delivered. majority AKA to the misapplied has Deerfield, 510 N.Y.S.2d 502 N.E.2d at AKA, facts court of this case. omitted). Thus, (quotation 1004-05 Minnesota predicted Supreme policy behind the economic loss doctrine apply Court would the economic loss doc- (i.e., the duplicative damages) avoidance of trine all preclude to fraud claims with is not at issue when the tort alleged is exception of misrepresen- those fraudulent fraudulent inducement. independent tations made from and collat- The definition of “fraud in induce- majority eral to the contract. The makes Dictionary ment” as stated in Black’s Latv a conclusory determination that Marvin’s (7th ed.1999), is: fraudulent inducement claim is not inde- occurring misrepresenta- Fraud when a pendent tangen- of the contract because it tion leads another to enter into a trans- tially subject relates to the matter of the action with impression a false majority that Mar- argues contract. The risks, duties, involved; obligations vin’s fraud claims “all revolve around one misrepresentation a mate- intentional allegation: central PPG misled Marvin on, duty reasonably rial risk or relied into PILT believing that would be an effec- thereby injuring party the other without product, tive PILT The ma- but failed.” itself, vitiating esp. the contract about a jority opinion goes says on and relating fact value. “only harms from PILT’s arose In the earlier Sixth Edition of Black’s Law not, inefficacy, example, from PILT’s (6th ed.1990), Dictionary 661 “fraud in the majori- difficulties with certification.” The “[m]isrepre- inducement” is defined as a ty expresses argument astonishment at the terms, or other quality sentation as that Marvin’s fraudulent inducement claim aspects Any of a contractual relation.” of and independent collateral fraudulent inducement made a seller to breach of contract claim. buyer induce the enter into a buyer always subject contract will relate to respectfully majority’s I submit that the contract; thus, majori- matter of the princi discussion misunderstands the basic ty’s difficulty in test creates an inherent ples of a claim of fraudulent inducement. ever a claim of induce- finding fraudulent misrepresentation present Where the independent ment of the contract. This fact serves as an inducement for the con analysis overlooks the fundamental basics tract, duplicitous it is not of the breach of of a fraudulent inducement claim. contract claim. the New York As Court Moreover, in Appeals stated in Communica the Tenth United Circuit Deerfield Chesebrough-Ponds, Holdings, (Holdings) tions Corp. v. 68 Int’l Inc. v. Wharf has (10th Cir.2000), representation claims. The Ltd., cogent- 210 F.3d 1207 quality pre- of the nothing to do with the fraudulent inducement why ly explained by servative, covered allegedly under the which is barred claims should not be Rather, it warranty claims. relates loss doctrine. economic formula- history background and claim is based negligence aWhere true, allegations If Marvin’s tion’s use. duty, the law of a contractual breach deceitful, independent induce- expose a punish rightly contract does by buy product. PPG ment breach- but limits the breaching party, that nat- liability damages ing party’s in- allegation of fraudulent The second It an the breach. is urally flow from representa- supposed ducement is PPG’s it where altogether different situation Marvin would receive the same tion that good faith parties have in appears two that Ander- PILT formulation as used but, actuality, into a contract entered Windows, industry for which leader sen deliberately made materi- party has one regard. represen- This high Marvin holds past pres- or representations al false quality to neither the nor tation relates fact, to dis- intentionally failed ent has PILT It character of the formulation. fact, or past present a material or close however, relate, identity of the does information negligently given has false false, repre- to be sold. If this formulation knowledge party that the other trickery by clear sentation constituted on that information would act reliance Marvin to independently PPG to induce with a third in a transaction business suggest that the contract. To enter into breaching in this lat- party. party quality relates to the representation this may and ter situation also is tortfeasor and is there- product and character of the the law of contract to shield not utilize syllogis- by warranty requires covered party’s deliberate liability tort for reasoning gives way to the most tic misrepresentations. negligent product If the sold to simplistic challenge. at 1226- Holdings, 210 F.3d United Int’l defective, is now Marvin was indeed claimed, totally wheth- that is irrelevant to majori- Hence, in the the basic obstacle used the same for- er Andersen Windows in- оf AKA to fraudulent ty’s application mulation with success. difficult to general claims in ducement in- allegation of fraudulent The third However, majority’s posi- surmount. representation ducement relates to PPG’s con- more untenable when one

tion is even successfully PILT formulation underlying Marvin’s siders the facts industry standards and tests. One met claim. in the inducement would assume that a that success- would fully met those standards tests Inducement 1. Marvin’s Fraudulent however, trustworthy; there was noth- Claim ing negotiations between urges supports that the record required the PILT to meet and PPG which inducement allegations of fraudulent Thus, representation such standards. First, rep- ways. Marvin claims PPG four ‍‌‌​​‌‌‌‌​​​‌​​‌​​‌​​​‌‌‌​​​‌‌​​​‌​​‌‌​​​​‌‌​​‌​‌‍contract, wholly independent years long- resented that it undertook served as an inde- statement PILT formu- testing term field of Marvin’s pur- for Marvin to pendent inducement allegation supports lation. Marvin the PILT. chase that, true, if leaves with detailed evidence claim that used a jury Finally, that a could PPG question no reasonable by supplying technique was made and “bait and switch” representation find such testing switching PILT Obviously this claim Andersen was false. contract; however, at the time of Marvin’s such the formulation “relates” to the sufficiently collateral by purchase is inducement is not subsumed (in particularity many contract to survive the economic loss doc- and though not all jurisdictions) AKA. Marvin heightened trine and asserts a burden of proof and purchased convincing PILT it was not the same as evidence —clear preponderance versus a bare of samples supplied. the test PPG This al- the evi- dence, the standard civil burden. legedly misrepresentation fraudulent has nothing to do with the contract other than Applying this observation to the facts of PILT to induce Marvin to believe bаr, the case at how would one contem- sold to it was the same formulation that plate warranty relating testing, na- again, Andersen used. Once the fraud tional approval, tactics, bait and switch identity product being relates to the of the by successful use To require par- others? quality sold rather than the or character of anticipate ties to misrepresentations on the PILT. subjects such extraneous is to force them to enter into negotiations contractual Application AKA and Huron general of perhaps unbased distrust Tool and suspicion of each other. Marvin’s claim should not be stifled such an majority overly The errs in its broad interpretation irrational of the economic application of AKA and the economic loss loss doctrine. recently doctrine. As the Seventh Circuit Telecom, in Amway

stated All-Tech Inc. v. It indisputable under the case law (7th Cir.1999): Corp., tort, independent 866-67 that an purposes of exception, “requires the Huron Tool proof Some of our cases describe the eco- of separate facts and distinct from the might nomic-loss doctrine words that Int’l, breach of contract.” Eye Care Inc. imply seem to the abolition of the tort of Underhill, F.Supp.2d misrepresentation (including deliberate (M.D.Fla.2000) omitted). (quotation fraud) in plaintiff all cases which the comprise facts which Marvin’s breach of and the defendant are firms business warranty are completely separate claims having preexisting contractual rela- from those forming the basis of the fraud- tionship given that had rise to the fraud allegations. ulent inducement Marvin ar- or misrepresentation.... gues warranty that PPG breached its of go If commercial fraud is to complete- performance by stating future that PILT boards, ly by reading as a literal of equally or more effective than Penta and might some of the economic-loss cases expressly representing to Marvin that suggest, then prospective parties to con- PILT preventing would remain effective in will legal protec- tracts be able to obtain twenty-six years. rot for at least against only by insisting tion fraud fraudulent aforementioned inducement party the other to the contract reduce any claim no of makes mention these representations all writing, so performance. other statements of future nego- there will be additional contractual Thus, necessary to prove evidence tiations, and, contracts will longer, be Marvin’s fraud the inducement claim is short, higher. transaction costs will be separate required and distinct from that And the additional will costs be incurred fact, prove breach PPG. making every in the con- commercial conceivably the fraud allegations could tract, just tiny fraction that end if actionable even PILT had worked as it Granted, up litigation. there are was intended. uncertainty possibility costs of from the falsely charging survey fraud when a con- A the inde- applying the cases sours, relationship pendent requirement tractual as it did in of the econom- allega- this case. But the fraud tort comes with ic loss doctrine shows that Marvin’s claims, safeguards against false tions nature as other such are not same requirement pleading types commonly misrepresenta- fraud with barred 894 doctrine, only misrepresenta the are “where representations which

tions. Those the party tion the dishonest concerns restate the under- barred either frequently sold, or character of quality for the breach defect that is the basis lying negotiate breaching party is still free to war reiterate the contract claim or of possi to for ranty under the con- and other terms account perform failure to party’s Tool, Huron 532 goods.” Marvin’s claims do neither. ble in the tract. defects added). (emphasis at 545 See also N.W.2d Product De- Allegations a. Related to Kemutec, Inc., 66 Corp. Prods. Rich (“When (E.D.Wis.1999) 937, fect F.Supp.2d 969 are frustrated be expectations contractual excep characteristics quality and subject of cause of a defect in the matter tion, articulated in Huron Tool and contract, Servs., remedy party’s a lies exclu Consulting Eng’g v. Precision Co. contract.”); 365, sively Douglas-Hanson in Co. Inc., 541 Mich.App. 532 N.W.2d 209 Co., 132, (1995), BF 229 598 progeny, is a method of v. Goodrich Wis.2d and its (1999) (same), 262, aff'd, 233 parties to execute warranties N.W.2d forcing (2000) (per 607 N.W.2d 621 against contracting defects that the Wis.2d protect curiam); v. United Vaccines rationally hamper could foresee as parties Theuerkauf Inc., Sprague Dawley, Harlan product. the effectiveness of the As Div. ing (W.D.Mich.1993) 1238, 1241-42 Supreme explained F.Supp. of Wisconsin Court (“[T]he Co., only remedy relating for claims Northridge Co. v. Grace and in W.R. product, of the such as a performance 185 the 162 Wis.2d (1991), product that the did not work as it damages economic loss are “intend claim work, supposed may brought suf be protect purchasers ed to from losses was law.”). in in product failed under contract Because Marvin’s fered because Hence, in fraudulent inducement claim is unrelated product use.” defects tended PILT, it suitability quality good underlying and are to the defects application not fall victim to this through redressed actions contract. See should Likewise, the economic loss the economic loss doctrine.3 id. under Circuit, pressures 3. Seventh as well as district under low and increase its custom- Wisconsin, York, base;” (2) Michigan, product "extremely courts in New er Pennsylvania, applied liquid tougher, lighter, have all the eco- resin that was versatile restating nomic loss doctrine to claims liabili- design more cost efficient and more flexible in ty product appli- A review of the for defects. capability engineering than other com- law cable case makes clear Marvin's (3) potential molding pounds;” "it had fraud the inducement claim is of different ribs and bosses with a Class A surface and no ilk. indentations;” (4) "cycle sinks or time for minutes, molding ... would be 2.5 to 3.5 Cooper Sys., In Power Inc. v. Union Carbide secondary finishing required, was not (7th Chems. & Plastics 123 F.3d 675 only cleaning required, minimal would be Cir.1997), parties a contract entered into parts produced by that the METTON® would plaintiff sale of resin used (5) easily paintable;” METTON® protective coating system. After the resin "compatible would be Allmand's zinc with failed, plaintiff alleged fraud in the defen- Allmand, alloy F.Supp. ... tools.” at problems dant's failure inform of repre- Allmand these 1219. sued for fraud on instability inability color and its to meet mini- sentations, but the court found that the claims product specifications. mum The Seventh Cir- they qual- were barred because concerned the plaintiff's "ultimately claims cuit found ity and Simi- characteristics METTON®. sold,” quality concerned] larly, in a case out of the Western District of Power, Cooper and were thus barred. Michigan, Corp., Martin v. A.O. Smith (W.D.Mich.1996), F.Supp. plaintiffs al- Assocs., Allmand Inc. v. Hercules leged knowingly misrepresen- (E.D.Mich.1997), the defendant F.Supp. the defen- silos, "oxygen-limiting” capacity ted the of its representations regard- a series dant made rejected and the court the fraud claim as ing molding the abilities of its "METTON®” (1) process, including: quality or character of the would related "METTON® Likewise, high parts v. United Vac- enable Allmand to make volume silos. Theuerkauf

895 accep- received FCC-type transmitter had category in this running theme The yet tance it had not received such of a con- when the recharacterization cases is fraudulent mis- The court discussed the merits approval. defect as a tract-breaching to, rejected allega- and subsequent separate All the of this claim representation. from, the failure in distinguishing to the cause of discussion contract relate tions subject of the contract. and tort claims. One of Marvin’s fraud the however, claim, representation allegations fraudulent inducement involves PPG’s contract- recharacterize the successfully industry does not that PILT met stan- misrepre- a fraudulent breaching similarity defect as claim to that dards. The The fraud in the inducement sentation. in is clear. Marvin’s claims Closed Circuit allege hidden in this case does not asserted categorically different from those that are PILT from work- prevented problems contract-breaching fall restate defects and rather, alleges inde- ing properly; victim to the economic loss doctrine. affirmative misrepresentations pendent, Hence, majority barring in Mar- the errs the efficacy the internal unrelated to vin’s fraudulent inducement claims. PILT. Failure to Allegations b. Related to Indeed, Corp. in v. Jerrold Closed Circuit Perform (E.D.Pa. Corp., F.Supp. 426 361

El ecs. Allegations couched terms of fraud 1977), positively commented the court restating breaching party’s and the failure strikingly similar to a fraud claim about the fall perform under contract also Mаrvin’s claims. The defendant one of victim to the loss doctrine. See that its electronic economic allegedly misrepresented Dawley, sought purchase 821 was suitable for use on Sprague Harlan cines Div. of (W.D.Mich.1993), the Mediterranean Sea. The court dismissed F.Supp. the district 1238 concerning allegations ultimately the rejected plaintiff’s fraud the claim as court the supposed misrepre yacht's quality. regarding the defendant’s Polymer injected Barroso v. safety The district court sentation of the of vaccine (E.D.N.Y. Corp., F.Supp.2d 80 39 plaintiff's and its failure Research the breed stock mink 1999), related to plaintiff side effects. was faced with fraud claims to warn the of harmful properties a chemical used in Raytheon v. McGraw-Edi the formula court in Co. The n Co., (E.D.Wis.1997), colorizing objects. The- defendant al F.Supp. metal son 979 858 ap allegations legedly stated that the formula could be rejected plaintiff’s that the de thickness, varying plied to aluminum of committed in its sale of con fendant fraud speed dependent found fraud results were not taminated land. The court plaintiff “inseparably application, the did not need to modi embodied” within the claims fy procedures underlying Raytheon, its own treatment before terms contract. metal formula, representations applying the the formula could with F.Supp. 979 at 873. Kemutec, Inc., bending high temperatures, and Corp. stand and in Rich v. issue Prods. (E.D.Wis.1999), cutting treated metal would not effect F.Supp.2d 977 re 66 plaintiff conveyor's alleged sued for fraud on lated colorization. mechanical failed, representations ability of al these after to "handle or move mountains suitability rejected the claim because it anything,” for use in the and the court most experience еntirely breach of bakery industry, from an "stem[med] "excellent products,” agreement with de handling bakery duties assumed under materials Barroso, record,” F.Supp.2d at 44. Fi "good suitability for the fendant.” 80 track nally, Corp. v. Jerrold Elecs. plaintiff's requirements. The con in Closed Circuit uses (E.D.Pa.1977), F.Supp. plain Corp., veyor perform failed to in accordance with for the fraudulent sale of expectations, plaintiff sued in tort. tiff sued defendant and the electronics, alleging faulty reli rejected and defective The court the fraud claims because representations as to they mer ance on the defendant’s the warranties of "mirror[ed] design, engineering particular pur and manufacture of chantability and fitness for a plaintiff's complaint stat part equipment. The pose ... became of the contract which repre supplementary Id. ed that it had relied on the defendant's terms under UCC.” equipment would work Similarly, Holdings, that the in Shandwick Ltd. sentations F.Supp.2d purposes, but it did not. The Corp., its intended Carver Boat (E.D.Wis.2000), appropri allegedly were more mis court found claims the defendant theory. plaintiff ately brought under a contract represented yacht Co., Export Burling Paving Dantzler Lumber & Co. v. Eastern Ohio (6th Cir.1998) (“[T]he F.Supp. ton Lumber defendant must (M.D.Fla.1997) (“If claims relate to fraud fraudulently plaintiff have induced the performance, the economic loss rule agreement, enter into the and that induce- preclude recovery.”). will Where promise merely ment must be a other than claims of fraud are interwoven with the pledging perform to the terms of the con- breach, alleged misrepresentations the tract.”). breaching party’s performance concern the the category, each of cases within this contract, misrepresenta under the and the allegations the of fraud revolve around the tions do not create an tort independent Tool, breaching party’s up failure to live to its of action. cause See Huron 532 Corp. promises N.W.2d 545. See also GBJ v. under the contract.4 Unlike Again, applicable parties Optical Corp. a review of the case law is Hudson v. Cabot Safe- (E.D.N.Y.1997), helpful. ty Corp., F.Supp. 971 108 agreed safety glasses. to the sale and resale of Valu, Boys, Pep In Home Inc. 213 v. plaintiff alleged The the defendant fraudulent- (7th Cir.2000), parties 960 the entered into a 72,700 misrepresented ly its intention to sell property. contract for the sale of real frames, plaintiff’s of the as well as its inten- allegedly orally plaintiff defendant assured the promote plaintiff’s equally tion to the frames purchase property by that would the the with its own. The claims were held to be date, closing which was included in an insufficiently extraneous from the contract to agreement. amendment to the The defendant withstand the economic loss rule. plaintiff then backed out of the sale. The The District Court for the District of Minne- representation claimed the was fraud in the nonperformance sota was faced with a claim inducement; however, the Seventh Circuit restated as a fraud claim in In re Grain Land Coop found the fraud the claim barred economic Cases, (D.Minn.1997). F.Supp. 978 1267 Corp. loss doctrine. In GBJ v. Eastern Ohio producers agricultural coop Grain and an as- Co., (6th Cir.1998), Paving 139 F.3d 1080 the fixing sociation entered into contracts the rejected Sixth Circuit a fraud claim based on price delivery grain. for the deferred of A alleged promise the defendant’s to enter into subsequent grain prices coop rise in led the to multi-part deal that basis was the of the policy changes, announce a series of includ- breach of contract claim. The ex- court ing the termination of the contracts. The plained: plaintiffs’ complaint "The the names fraud, producers theory sued on a and the prom- terms of the the contract as relevant proscribed by court found the tort claims the such, indistinguish- ises. As the tort claim is economic loss doctrine. In Parkhill v. Minne- claim, able from the contract and cannot exist Co., F.Supp. sota Mutual Ins. 995 983 Life GBJ, alongside it.” 139 F.3d at 1088. (D.Minn.1998), plaintiffs alleged the de- The District Court for the Southern District fraudulently pur- fendant induced to them of New York was faced with a fraudulent "vanishing premium” chase life insurance nonperformance inducement claim based on policies by misrepresenting the nature of the Harris, F.Supp.2d in Scholastic Inc. v. 80 139 product. Specifically, allegedly the defendant (S.D.N.Y.1999). Plaintiffs that the de- out-of-pocket pre- understated the number of fraudulently fendants induced them to enter a payments required mium that would be joint by misrepresenting venture the number policy. maintain the When the defendant projects develop the defendants would premium failed to discontinue its assessments they the amount time and resources would contract, required plaintiffs under the dedicate to the venture. The court dismissed rejected sued for fraud. The court their claims, explaining the fraud claims claim, stating representations that "the made were identical to the contractual duties which by defendant dispute are at the heart of the allegedly the defendants breached. In S.O. Parkhill, parties' agreement.” over the Group, Textiles Co. v. A & E Prods. F.Supp. at 994. (E.D.N.Y.1998), F.Supp.2d plaintiff Weigel Broadcasting In Ice Bowl L.L.C. v. pur- cоntracted with the Co., defendant for the (E.D.Wis.1998), F.Supp.2d hangers chase of in which the defendant plaintiff misrepresentation theory sued on a pledged give plaintiff percent a seven pay monetary after the defendant failed to purchases. agreement rebate on its fell designated sums under the contract and failed through, plaintiff alleged and the provide defen- plaintiff air television lime rebate, give dant never intended to but parties previously agreed. as the The court plaintiff rather used it to explained: induce the to con- "The tort theories advanced in this allegations tract. The court found the not case Ice Bowl ... add no facts to the extraneous to the merely adjec- terms contract. The contract claims but invoke new of an cases, are AKA found that the concealment allegations Marvin’s these and a per- agreement failure to between ‘defendant PPG’s reiterations of not party competitor plaintiff contract. third to the under future acts form sufficiently appli- mis- extraneous to avoid the Rather, allegations concern facts, material cation of the economic loss doctrine. See present, representations AKA, efficacy F.3d at 1087. I also note quality unrelated itself, excep- at the courts have created a blanket were untrue some which in the for fraud or fraudulent inducement Marvin’s fraud tion making. time of v. e.g., City fall claims. Richmond claim should inducement Management Group, category of Madison wayside under this second (4th Cir.1990) (applying Virginia F.2d 438 cases.5 law); Cunningham PFL Ins. Life reci- preceding from the case It is clear (N.D.Iowa 1999) (pre- 42 F.Supp.2d 872 likely more that courts have been tation law); HTP, Ltd. v. Lineas dicting Iowa under the economic loss a fraud claim bar Costarricenses, S.A., 685 So.2d Aereas “indepen- to fit it under the doctrine than law). (Fla.1996) (applying 1238 Florida exception. contract” As dent of the Inns, Inc. v. Micros Budgetel in court D. Conclusion Inc., 1137, 1146 F.Supp.2d Sys., 8 analysis, I foregoing Based on the would noted, (E.D.Wis.1998), a func- may (1) contrary to holding, reverse: Hu- inapplicability of the tion of the basic law, qualifies that Marvin Minnesota exception to fraudulent induce- ron Tool (2) kind; of the merchant Nevertheless, have courts ment claims. of the economic loss improper application loss doc- apply the economic declined to claims, contrary doctrine to all inducement-type claims fraudulent trine to (3) law; rejection Minnesota e.g., Int’l in several instances. See United claim, inducement as- Marvin’s fraudulent Cir.2000) (10th Holdings, F.3d 1207 210 fraud claims are suming that non-collateral law); Florian Green- (applying Colorado by the loss doc- properly economic barred house, 11 Corp., Inc. v. IG Cardinal trine. (D.N.J.1998) New (applying F.Supp.2d 521 sending can be little harm misrepresentation There Jersey law-defendant’s inducement claim back com- fraudulent plaintiffs terms of contract with Mitchell, majority has de- jury, especially since Randolph v. 677 So.2d petitor); on the warran- Flori- cided to send the case back (Fla.Dist.Ct.App.1996) (applying 976 in Huron the claimants ty as to in- issue. Unlike misrepresentation law-agent’s da Tool, Indeed, fraud with sufficient pled Marvin has coverage). this court surance claim, finding rejected the single dispute The court in this ment. tives. There is but a case, sounding Ice one in contract." independent and it is the contract. Bowl, F.Supp.2d at 1082. Likewise, Appeals re the Florida Court are cases out of I note that there ’ defendants' jectеd a fraud claim based on cited which are sometimes Minnesota contractually-related three failure to fulfill applying economic loss doctrine. courts Key Largo, v. RHI promises Inc. in Hotels of Lab., Lab., Mylan Upsher-Smith Inc. Hotels, Inc., (Fla.Dist.Ct.App. 694 So.2d (D.Minn.1996); F.Supp. Nel 1997). allegedly misrepresen The defendants Distrib., Indus. Inc. v. Stewart-Warner son Balancers, (1) part plaintiffs of the would become ted: Radisson Hotels (D.Minn.1992); F.Supp. family participate and would Paul, City St. No. Graphics, Inc. v. ETM (2) plain system; a worldwide reservation C2-91-2103, (Minn.Ct.App. WL 61394 tiffs reservation be the sole beneficiaries would Mar.31, 1992). these court in AKAcited This Keys; system in the Florida holding. support A review of its (3) cases plaintiffs’ forty percent of room more than however, opinions, leave the read the reservation three reservations would come from these system agents. When the defen understanding and travel of the factu a clear er without through prom on their dants failed to come ises, the fraud claims. al basis of plaintiffs fraudulent induce- specificity under Federal Rule of Civil Pro- 9(b).

cedure Marvin’s Amended Com- concrete, plaint gives specific examples of giving the circumstances to its fraud rise presented, claim. Once all the evidence is the trial can court determine whether proof has met its burden of on the

elements of fraudulent inducement. See Contracting Corp. Western v. Dow Chem. (8th Cir.1981) 1100-01 (listing the elements of fraud in in- law). Thus, under ducement Minnesota stated, reasons the district court’s grant of summary judgment in error.

Faye ANASTASOFF, Appellant, America,

UNITED STATES of Appellee. No. 99-3917EM. United Appeals, States Court of

Eighth Circuit. 8,May Submitted: 2000. Aug. Filed:

Gregory Hewett, Louis, MO, A. St. ar- (Juan gued Keller, D. Philip Wright, B. brief), Appellant. for Wollitzer, I. Rachel Department U.S. ‍‌‌​​‌‌‌‌​​​‌​​‌​​‌​​​‌‌‌​​​‌‌​​​‌​​‌‌​​​​‌‌​​‌​‌‍Justice, DC, (Paula Washington, argued Junghans, M. Acting Attorney Asst. Gen- eral, Farber, brief), Richard on the for Appellee.

Before: RICHARD S. ARNOLD and HEANEY, Judges, Circuit MAGNUSON,1 Judge. District Minnesota, 1. The Magnuson, Judge, Hon. Paul A. sitting by Chief designation. United States District Court District of

Case Details

Case Name: Marvin Lumber & Cedar Co. v. PPG Industries, Inc.

Court Name: Court of Appeals for the Eighth Circuit

Date Published: Aug 22, 2000

Citation: 223 F.3d 873

Docket Number: 99-1424

Court Abbreviation: 8th Cir.