MEMORANDUM OPINION AND ORDER
Presently pending before the Court for disposition is DEFENDANT FORD MOTOR COMPANY’S MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) AND MOTION TO STRIKE PURSUANT TO FED. R. CIV. P. 12(F) (Document No. 4) with brief in support, filed by Defendant, Ford Motor Company. Plaintiffs filed a brief in response to Defendant’s Motion to Dismiss and Motion to
Factual Background
This case arises from a fire that ignited unexpectedly and spontaneously from a 1997 Ford Expedition while it was parked inside of a warehouse on or about December 23, 2007. (Compl. at ¶ 10). 1 As a result of the fire, Plaintiffs 2 allege that they suffered “loss of income, interruption of their business, loss [sic] of improvements to the warehouse, business relocation expenses, loss of use of their money, loss of use of their property, damage to their property, loss of contents in the building, and incurred interest expenses to finance the repairs.” (Compl. at ¶ 15). Plaintiffs claim that the smoke and heat from the fire damaged their real and personal property. (Compl. at ¶ 26).
Plaintiffs, Richard A. Tennis and Ronda L. Tennis, husband and wife, reside in Washington County, Pennsylvania. (Compl. at ¶ 1). Plaintiff Tennis Inc., a Pennsylvania corporation, is owned by Richard Tennis. (Compl. at ¶ 2). Plaintiff Tennis Roofing & Asphalt, Inc. is also a Pennsylvania corporation owned and operated by Richard Tennis in Washington County, Pennsylvania. (Compl. at ¶ 3). Tennis, Inc. owned the 1997 Ford Expedition with vehicle Identification Number 1FMEU18W6VLA14811 (“1997 Ford Expedition”). (Compl. at ¶ 8). Defendant Ford Motor Company (“Ford”) is a corporation that exists under the laws of the State of Michigan, with its principal place of business located at 1 American Road, Dearborn, Michigan 48126. (Compl. at ¶ 4).
The warehouse that was destroyed in the fire was located at 821 Morganza Road, Allegheny County, Canonsburg, PA 15317, where Plaintiffs operated a roofing and asphalt business. (Compl. at ¶ 10-11). Plaintiffs had entered into an option to purchase the warehouse building, and had done substantial repairs and additions to the building in an amount in excess of $120,000, including a new addition, a new roof, and a new driveway. (Compl. at ¶ 12).
The Complaint alleges that the fire occurred due to a defect in the 1997 Ford Expedition’s Speed Control Deactivation Switch (“SCDS”). (Compl. at ¶ 16). The fire allegedly originated at the SCDS due to an electrical short or failure of the SCDS and/or its associated circuitry. (Compl. at ¶ 19). The heat generated by the electrical short or failure of the SCDS was sufficient to ignite the surrounding combustibles within the vehicle’s engine compartment. (Compl. at ¶ 20).
The SCDS is a hydraulic pressure switch that functions as a redundant safety switch to stop power during brake applications. (Compl. at ¶ 27). The switch is normally closed, but contracts open at brake system pressures produced by approximately 5 to 10 pounds of force on the brake pedal. (Compl. at ¶ 28). The SCDS may be oriented so that it mounts in a vertically up, vertically down, or angled down position. (Compl. at ¶ 31). In the 1997 Ford Expedition, the SCDS was mounted in a vertically up position. (Compl. at ¶ 31). The three primary factors that contribute to the defect and failure of the SCDS are 1) vacuum pressure (duration and magnitude); 2) SCDS orientation; and 3) the presence of power at all times. (Compl. at ¶ 56). The Complaint alleges that Ford has known since 1999
The Complaint asserts that the switch on the 1997 Ford Expedition received uninterrupted voltage and electrical current from the battery so that it was “Powered at All Times” (“PAT”). (Compl. at ¶ 34). The switch contracts to conduct up to 0.75 amps to the speed control clutch when the speed control is engaged, and 0.005 amps when not engaged. (Compl. at ¶ 35). Depending on the model, Ford installed either a 15 or 20 amp fuse on the speed control circuit. (Compl. at ¶ 36). According to the Complaint, this is significantly more than the current needed for the normal operation of the SCDS microprocessors, and is oversized for this system. (Compl. at ¶ 36).
Even when the automobile is turned off, the SCDS has electricity running through it. (Compl. at ¶ 77). Allegedly, the SCDS circuitry does not contain a circuit breaker or fuse that will isolate, protect, or interrupt the power to the switch when the current exceeds a level essential to produce enough electrical power to overheat. (Compl. at ¶ 78). With vehicles that are powered all the time, the continuous power provides the source to produce sufficient energy to start heating the components of the switch. (Compl. at ¶ 80). According to the Complaint, it was economically, technologically, and physically feasible for Ford to make the SCDS “non PAT” prior to the design, manufacture, and marketing of the 1997 Ford Expedition. (Compl. at ¶ 81).
Plaintiffs contend that Ford knew in 2003 that it was using a “defective electrical component part” (SCDS) which it received from Texas Instruments, and it delayed in having issued a recall of its vehicles, including Plaintiffs 1997 Ford Expedition. (Compl. at ¶ 85). Plaintiffs allege that Ford knew, or should have known, that the defective SCDS and component switch would cause substantial numbers of property damage, injuries, and deaths due to its combustible design, and lack of appropriate and adequate fire avoidance elements. (Compl. at ¶ 86).
According to the Complaint, Ford claims to have allegedly sent out numerous recall notices to its customers, but many customers did not receive any communique alerting them of this recall, or they received letters that were inadequate to constitute a warning of the known dangers. (Compl. at ¶ 97). In cases in which Ford customers did receive recall letter(s), the vehicles were either improperly repaired or could not be properly repaired because Ford lacked a sufficient supply of repair and/or replacement parts. (Compl. at ¶ 98). Plaintiffs claim that in March of 2008 they did receive a recall notice for their 1997 Ford Expedition-after it had already caught fire. (Compl. at ¶ 99).
The Complaint alleges the following causes of action: (I) Strict Liability, (II) Negligence, (III) Breach of Implied Warranty of Merchantability, (IV) Fraud, (V) Negligent Misrepresentation, (VI) Fraud by Non-Disclosure, (VII) Breach of Contract, (VIII) Res Ipsa Loquitur, and (IX) Punitive Damages.
In response, Defendant avers that Plaintiffs’ claims of fraud (Count IV), negligent misrepresentation (Count V), and fraud by non-disclosure (Count VI) must be dismissed pursuant to Fed.R.Civ.P. 12(b)(6) under Pennsylvania’s “gist of the action” doctrine. Additionally, Defendant argues that Plaintiffs’ claims of strict liability (Count I), negligence (Count II), and negligent misrepresentation (Count V) must be dismissed pursuant to Fed.R.Civ.P. 12(b)(6) based on the economic loss doctrine. Further, Defendant asserts that
Procedural History
Plaintiffs filed their Complaint in Civil Action in the Court of Common Pleas of Allegheny County, Pennsylvania on April 8, 2010. Defendant filed a timely notice of removal on May 4, 2010 to this Court based on diversity jurisdiction. On May 11, 2010 Defendant filed a Motion to Dismiss seven of the nine counts of the Complaint, a Motion to Strike paragraphs 17-98 of the Complaint, and a supporting brief.
Legal Analysis
As a preliminary matter, jurisdiction in this case is based on the diversity of the parties. 28 U.S.C. § 1332(a). Pursuant to 28 U.S.C. § 1332(a), district courts “have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest, and is between ... citizens of different States.”
Id.
Complete diversity requires that, in cases with multiple plaintiffs or multiple defendants, no plaintiff be a citizen of the same state as any defendant.
See Zambelli Fireworks Mfg. Co. v. Wood,
Further, a federal court sitting in diversity must apply substantive law of the state in which it sits,
Erie R.R. Co. v. Tompkins,
Defendant has raised numerous legal challenges to the Complaint. The Court will first address Defendant’s Motion to Strike paragraphs 17-98 of the Complaint based on Fed.R.Civ.P. 12(f). The Court will then address Defendant’s Motion to Dismiss for failure to state a valid claim pursuant to Fed.R.Civ.P. 12(b)(6).
A. Motion to Strike Pursuant to Fed. R.Civ.P. 12(f)
Defendant moves to strike 82 of the first 98 paragraphs in the Complaint pursuant to Fed.R.Civ.P. 12(f) on the basis that these paragraphs are devoid of any relevant information, and are either impertinent or scandalous. Defendant contends that Plaintiffs have pled impertinent evidentiary information regarding different makes and models of Ford vehicles rather than Plaintiffs 1997 Ford Expedition in paragraphs 17-20, 39, 55, 82, 84, 87-90, and 92-98. Defendant also argues that Plaintiffs have improperly pled evidence in many paragraphs that is akin to an introductory statement. Defendant asserts that only the first 16 paragraphs aver facts directly related to Plaintiffs 1997 Ford Expedition, and Plaintiffs’ counts averring causes of action do not begin until paragraph 99, such that all of the intervening averments should be stricken.
In response, Plaintiffs contend that they are not precluded by Rule 12(f) from averring specific facts contained in paragraphs 17-98 of the Complaint because the averments are relevant, material, pertinent, and truthful. Plaintiffs argue that the material in the Complaint relates to the controversy, serves to educate the court, and demonstrates that Defendant had knowl
Under Fed.R.Civ.P. 12(f) “[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Rule 12(f) “permits the court, on its own motion, or on the timely motion of a party, to order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.”
Adams v. Cnty. of Erie, Pa.,
Although courts possess “considerable discretion in disposing of a motion to strike under Rule 12(f),’ such motions are not favored and usually will be denied unless the allegations have no possible relation to the controversy and may cause prejudice to one of the parties, or if the allegations confuse the issues in the case.’ ”
Thornton v. UL Enterprises, LLC,
The Court finds and rules that paragraphs 17-98 of the Complaint do not contain redundant, immaterial, impertinent, or scandalous information. Although the Court recognizes Defendant’s concerns, the Court concludes that paragraphs 17-98 are related to this action and are not unduly prejudicial or scandalous to Ford.
Accordingly, the Court will DENY Defendant’s request to strike paragraphs 17-98 of the Complaint.
B. Motion to Dismiss Pursuant to Fed. R.Civ.P. 12(b)(6)
The Court will now address Defendant’s Motion to Dismiss claims in the Complaint pursuant to Fed.R.Civ.P. 12(b)(6).
Standard of Review
Federal Rule of Civil Procedure 12(b) provides that “the following defenses may at the option of the pleader be made by motion: ... (6) failure to state a claim upon which relief can be granted.” A motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) challenges the legal sufficiency of a complaint filed by the plaintiff. The United States Supreme Court has held that “[a] plaintiffs obligation is to provide the grounds’ of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
Bell Atlantic Corp. v. Twombly,
The Court must accept as true all well-pleaded facts and allegations, and must draw all reasonable inferences therefrom in favor of the plaintiff. However, as the Supreme Court made clear in
Twombly,
the “factual allegations must be enough to
Thus, after
Iqbal,
a district court must conduct a two-part analysis when presented with a motion to dismiss for failure to state a claim.
Fowler v. UPMC Shadyside,
As a result, “pleading standards have seemingly shifted from simple notice pleading to a more heightened form of pleading, requiring a plaintiff to plead more than a possibility of relief to survive a motion to dismiss.”
Fowler,
However, nothing in
Twombly
or
Iqbal
changed the other pleading standards for a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) and the requirements of Fed. R.Civ.P. 8 must still be met.
See Phillips v. County of Allegheny,
1. “Gist of the Action” Doctrine (Counts IV, V, and VI)
In Count IV of the Complaint (Fraud), Plaintiffs assert that Defendant Ford intentionally made material misrepresentations, including that the 1997 Ford Expedition was safe, while Ford knew it was subject to sudden ignition and catastrophic fires. (Compl. at ¶ 118). Plaintiffs allege that Ford intentionally concealed from and/or failed to disclose to Plaintiffs and others involved in the distribution process of the automobiles that the SCDS switches that Ford installed were defective. (Compl. at ¶ 118). Plaintiffs assert that Ford fraudulently and actively concealed the defective nature of the automobiles and the SCDS and Kapton products from Plaintiffs and other Ford customers. (Compl. at ¶ 120). Plaintiffs also contend that Defendant either knew the representations were false, or made such representations recklessly without knowledge of the assertions. (Compl. at ¶ 121).
Further, Plaintiffs assert in Count VI (Fraud by Non-Disclosure) that Ford concealed or failed to disclose that the 1997 Ford Expedition was defective, and Ford thus intended to induce Plaintiffs to purchase the subject automobile. (Compl. at ¶ 125). Counts, IV, V, and VI are referred to collectively by both Plaintiffs and Defendant as “the fraud claims.”
Defendant Ford contends that Plaintiffs’ claims of fraud (Count IV), negligent misrepresentation (Count V), and fraud by non-disclosure (Count VI) must be dismissed under Fed.R.Civ.P. 12(b)(6) based on the “gist of the action doctrine.” 3 According to Defendant, Plaintiff’s fraud claims arise from a contract, and therefore Plaintiffs are precluded from recasting them as tort claims. Defendant asserts that the gist of Plaintiffs fraud claims is that Ford breached express and implied warranties during the sale of the 1997 Ford Expedition to Plaintiffs. According to Defendant, because Plaintiffs fraud claims are intertwined with the breach of contract claim, they are barred by the “gist of the action doctrine.”
Plaintiffs respond by asserting that their claims of fraud, negligent misrepresentation, and fraud by non-disclosure arose prior to the formation of their contract with Ford, rather than from Ford’s failure to perform a contractual term. According to Plaintiffs, Defendant made false and misleading claims to Plaintiffs through representations that were separate and prior to any written or oral contractual agreement. Plaintiffs assert that although Defendant was aware of the unsafe defect causing fires in its vehicles, it failed to disclose those defects to Plaintiffs prior to their purchase of the 1997 Ford Expedition and the formation of a contact. In sum, Plaintiffs argue that the “gist of the action” doctrine does not bar fraud claims stemming from the fraudulent inducement to enter into a contract.
Pennsylvania’s “gist of the action” doctrine is “designed to maintain the conceptual distinction between breach of contract claims and tort claims.”
eToll, Inc. v. Elias/Savion Adver., Inc.,
The doctrine is based on the notion that the “important difference between contract and tort actions is that the latter lie from the breach of duties imposed as a matter of social policy while the former lie for the breach of duties imposed by mutual consensus.”
Bohler-Uddeholm Am., Inc. v. Ellwood Grp., Inc.,
Many courts have struggled with whether the “gist of the action” doctrine applies to fraud cases.
See eToll,
Here, Plaintiffs rely on three cases in support of their argument that “fraud in the inducement” claims are not barred by the “gist of the action” doctrine. First, Plaintiffs cite
Mirizio v. Joseph,
Second, Plaintiffs cite
Air Products and Chems., Inc. v. Eaton Metal Prods. Co.,
Third, Plaintiffs cite
Sullivan v. Chartwell Inv. Partners, LP,
In this case, by contrast, the parties entered into a contract and Ford performed by providing the 1997 Ford Expedition to Plaintiffs. Indeed, the car apparently was still in use at the time of the fire ten years later. Among the allegations of fraud, negligent misrepresentation, and fraud by non-disclosure in Counts V, VI, and VII, Plaintiffs assert in the Complaint that Defendant Ford made numerous material misrepresentations to induce Plaintiffs to purchase the 1997 Ford Expedition. (Compl. at ¶ 118, 123, 125). Plaintiffs additionally argue that Ford either knew its representations were false, or made these representations recklessly without any knowledge of the truth. (Compl. at ¶ 120, 121). The Court finds that Plaintiffs’ allegations of fraud are “intertwined” with the alleged failure of Ford to perform under the terms of the contract by providing a vehicle that was suitable for its intended use. Plaintiffs fraud claims are barred because Ford’s alleged failure to perform its contractual duties under the contract cannot be transformed into a claim for fraud.
See Caudill Seed & Warehouse Co., Inc. v. Prophet 21 Inc.,
The Court acknowledges that it must exercise caution in making a determination regarding the “gist of the action” doctrine at this early stage of the case.
See Weber Display & Packaging v. Providence Wash. Ins. Co.,
Accordingly, the Court will GRANT Defendant’s Motion to Dismiss Plaintiffs’ claims of fraud, negligent misrepresentation, and fraud by non-disclosure (Counts V, VI, and VII) as being barred by the “gist of the action” doctrine.
2. Economic Loss Doctrine (Counts I, II, and V)
Defendant asserts that Plaintiffs’ claims of negligence (Count I), strict liability (Count II), and negligent misrepresentation (Count V) must be dismissed pursuant to Fed.R.Civ.P. 12(b)(6) under the economic loss doctrine. Defendant relies on
Jones v. General Motors Corp.,
Here, Defendant contends that Plaintiffs cannot recover for damage to real and personal property because Plaintiffs did not own the warehouse that was destroyed in the fire. Defendant’s sole argument is that Plaintiffs have no claim for damage to real property absent ownership of the property destroyed. Defendant asserts therefore that Plaintiffs strict liability, negligence, and negligent misrepresentation claims are barred by the economic loss doctrine. 4
In response, Plaintiffs assert that under Pennsylvania law, their claims of strict liability, negligence, and negligent misrepresentation are not barred by the economic loss doctrine because they allege both economic and property damages in the Complaint. Plaintiffs concede that they did not own the warehouse, but point out that they suffered damage to the contents in the warehouse. 5 Plaintiffs allege that they suffered numerous other damages in addition to the loss of their 1997 Ford Expedition, and, therefore they are not prohibited from recovering in tort under the economic loss doctrine.
Under Pennsylvania law, the economic loss doctrine provides that “no cause of action exists for negligence that results solely in economic damages unaccompanied by physical injury or property damage.”
Excavation Technologies Inc. v. Columbia Gas Co. of Pa.,
In
REM Coal Co. Inc. v. Clark Equipment,
In this case, Plaintiffs did not own the warehouse, but rather entered into a lease with an option to buy it. Although Plaintiffs acknowledge that they cannot recover for loss of the warehouse, they assert that on account of the fire they lost their “contents in the building.” (Compl. at ¶ 15). The economic loss doctrine does not bar a plaintiff from recovering economic damages for personal property that was destroyed in a fire.
See Erie Ins. Grp. v. Ford Motor Co.,
Accordingly, the Court will DENY Defendant’s motion to dismiss Plaintiffs’ claims of strict liability (Count I) and negligence (Count II).
3. Res Ipsa Loquitur (Count VIII)
Defendant challenges Plaintiffs independent claim of res ipsa loquitur, and contends that Plaintiffs improperly pleaded this claim as Count VIII of the Complaint. Defendant relies on
Fassbinder v. Pa. R.R. Co.,
Res ipsa loquitur is “a shorthand expression for a rule of evidence which allows a jury to infer the existence of negligence and causation where the injury at issue is one that does not ordinarily occur in the absence of negligence.”
Sedlitsky v. Pareso,
The Pennsylvania Supreme Court adopted the definition of res ipsa loquitur set forth in Section 328D of the Restatement (Second) of Torts in
Gilbert v. Korvette, Inc.,
(1) It may be inferred that harm suffered by the plaintiff is caused by negligence of the defendant when (a) the event is of a kind which ordinarily does not occur in the absence of negligence; (b) other responsible causes, including the conduct of the plaintiff and third persons, are sufficiently eliminated by the evidence; and (c) the indicated negligence is within the scope of the defendant’s duty to the plaintiff.
Restatement (Second) of Torts § 328D cmt. 1 (1965)).
In addition, the Pennsylvania Supreme Court emphasized that res ipsa loquitur is “only a shorthand expression for circumstantial proof of negligence — a rule of evidence.”
Jones v. Harrisburg Polyclinic Hosp.,
The Court rules that res ipsa loquitur is a rule of evidence and not a separate cause of action. Therefore, the Court will GRANT Defendant’s Motion to Dismiss with prejudice Count VII of the Complaint.
4. Punitive Damages (Count IX)
Defendant asserts that Plaintiffs improperly pleaded Count IX for punitive damages as a separate count. According to Defendant, punitive damages cannot stand as a separate claim in the Complaint. Thus, Defendant requests the Court to dismiss Count IX. Plaintiffs do not challenge Defendant’s Motion to Dismiss the claim for punitive damages.
Punitive damages are a form of relief, and are not the basis for an independent cause of action.
Butler v. Yamaha Motor Co., Ltd.,
Here, Plaintiffs improperly pleaded punitive damages as a separate count from their underlying causes of action. The Court concludes that punitive damages are merely an element of damages, and, therefore Plaintiffs are unable to plead punitive damages as an independent cause of action.
The Court will GRANT Defendant’s motion to dismiss Count IX of the Complaint. The Court does not decide whether or not Plaintiffs may recover punitive damages under any of their remaining causes of action.
Conclusion
In summary, for the reasons herein-above set forth, Defendant’s Motion to Dismiss claims of fraud (Count IV), negligent misrepresentation (Count V), and fraud by non-disclosure (Count VI) based on the gist of the action doctrine will be GRANTED. With regard to the counts of strict liability (Count I) and negligence (Count II), Defendant’s Motion to Dismiss based on the economic loss doctrine will be DENIED. Additionally, Defendant’s Motion to Dismiss claims of res ipsa loquitur (Count VIII) and punitive damages (Count IX) is GRANTED. Further, Defendant’s Motion to Strike paragraphs 17-98 of the Complaint is DENIED.
An appropriate Order follows.
ORDER OF COURT
AND NOW, this 26th day of July, 2010, in accordance with the foregoing Memorandum Opinion, it is hereby ORDERED, ADJUDGED, AND DECREED that DEFENDANT FORD MOTOR COMPANY’S MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) AND MOTION TO STRIKE PURSUANT TO FED. R. CIV. P. 12(F) (Document No. 4) is GRANTED IN PART and DENIED IN PART as follows:
1. The motion to dismiss is GRANTED as to Counts IV, V, VI, VIII, and IX of the Complaint, which are hereby DISMISSED.
2. The motion to dismiss is DENIED in all other respects.
3. The MOTION TO STRIKE is DENIED.
Defendant shall file an Answer to Counts I, II, III, and VII of the Complaint on or before August 6, 2010.
Notes
. The Court notes that some of the paragraphs in the Complaint are numbered out of sequence, and/or are repetitious.
. The Complaint does not specify the damages suffered by the various Plaintiffs.
. Although the Pennsylvania Supreme Court has not expressly reviewed the concept of the "gist of the action” doctrine, it has recognized the problems inherent in allowing a party to proceed with both tort and contract claims for harm that arose in connection with a contractual relationship.
See Glazer v. Chandler,
. The Court notes that Defendant moved to dismiss Count V (Negligent Misrepresentation) based on both the gist of the action doctrine and the economic loss doctrine. The Court granted Defendant's Motion to Dismiss the negligent misrepresentation claim under the "gist of the action” doctrine and need not address it under the economic loss doctrine.
. It is unclear whether Plaintiffs are also seeking damages for improvements that they made to the warehouse in anticipation of sale. However, at this juncture, the Court need not decide this issue.