Opinion
CV-00-1245-ST.
March 29, 2001.
FINDINGS AND RECOMMENDATIONS
INTRODUCTION
Plaintiff, F.D.S. Marine, LLC ("FDS Marine"), brings this action against Shaver Transportation Co. ("Shaver"), Brix Maritime Towing, Inc., Brix Maritime Co., Marine Equipment Leasing Co., and Brix Rafting Sorting Co. dba Foss Maritime Co. ("Foss "). FDS Marine is engaged in the business of underwater diving, marine construction, and marine salvage. It seeks to recover for work performed between November 19 and December 19, 1999, to rescue Shaver's tugboat DESCHUTES which was stranded on the broken launch ways of Foss' yard on the Columbia River, Oregon.
The Second Amended Complaint alleges a federal maritime salvage claim against Shaver (First Claim for Relief), a quantum meruit claim against Shaver (Second Claim for Relief), and a breach of contract claim against Foss (Third Claim for Relief). Foss filed counterclaims against FDS Marine alleging breach of contract, breach of implied warranties, negligence, fraud, and violation of the Oregon Unfair Trade Practices Act ("UTPA"). This court has federal question jurisdiction over the marine salvage claim under 28 U.S.C. § 1331 and supplemental jurisdiction over the state law claims under 28 U.S.C. § 1367.
After these motions were filed, this court allowed FDS Marine to file a Third Amended Complaint which replaces the breach of oral contract claim against Foss with a quantum meruit claim against Foss. That amendment does not affect these motions against counterclaims filed in response to the Second Amended Complaint.
Now before the court are FDS Marine's Rule 12 Motions Against Counterclaims (docket #28) seeking to dismiss the Fourth and Fifth Counterclaims for fraud and violation of the UTPA and to more definitely allege damages. For the reasons set forth below, the motions should be granted as to the Fifth Counterclaim for violation of the UTPA and otherwise denied.
STANDARDS
Federal Rule of Civil Procedure ("FRCP") 12(b)(6) provides in part: Every defense, in law or fact, to a claim for relief in any pleading, whether a claim, counterclaim, cross-claim, or third-party claim, shall be asserted in the responsive pleading thereto if one is required, except 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 under FRCP 12(b)(6) will be granted only if it appears beyond doubt that the claimant can prove no set of facts which would entitle him to relief. See Conley v. Gibson, 355 U.S. 41, 45 (1957); Allwaste, Inc. v. Hecht, 65 F.3d 1523, 1527 (9th Cir 1995); Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir 1995). "The issue is not whether [the claimant] will ultimately prevail but whether the [claimant] is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). Thus, the review is limited to the complaint [or counterclaim], and all allegations of material fact are taken as true and viewed in the light most favorable to the nonmovant. Buckey v. County of Los Angeles, 968 F.2d 791, 794 (9th Cir), cert denied, 506 U.S. 999 (1992); Love v. United States, 915 F.2d 1242, 1245 (9th Cir 1989).
ALLEGATIONS
In November 1999, Foss performed repair work on the tug DESCHUTES while the vessel was docked on the marine railway (the "ways") at Foss's Rainier, Oregon facility. Foss's Counterclaim, 6 1. On or about November 19, 1999, after completing repairs, Foss attempted to return the DESCHUTES to the river, but the ways failed and the DESCHUTES came to rest above the waterline and Foss could not get the vessel back into the water. Id, 6 2. Foss contacted Fred Stambaugh ("Stambaugh") of FDS Diving, and asked that the ways be repaired. Id, 6 3. Stambaugh, on behalf of FDS Marine, agreed to repair the ways. An oral contract embodied the terms of this agreement. Id, 6 4. Between November 19, 1999, and December 19, 1999, FDS Marine had divers and other persons at Foss's Rainier facility, allegedly performing repair work on the ways. Id, 6 5.
FDS Diving and FDS Marine refer to the same entity so this court will simply use the term FDS Marine.
After FDS Marine completed its work, Foss discovered that the work performed was defective. It retained another diving company, Advanced American Diving ("AAD"), to analyze the defects and to repair the work performed by FDS Marine. Id, 6 6. AAD estimated that repairing and replacing the defective work performed by FDS Marine would cost at least $146,000.00.
Some months later, FDS Marine submitted an invoice to Foss in the amount of $400,411.08. This was substantially more than FDS Marine's estimate previously provided to Foss. Id, 6 7. After receiving this bill, Foss undertook an investigation of the billing, and discovered numerous discrepancies. Id, 6 8. Foss thereafter refused to pay the bill in its entirety and FDS Marine filed suit to recover its alleged damages.
DISCUSSION
FDS Marine seeks: (1) dismissal of Foss's Fifth Counterclaim alleging a violation of the UTPA for failure to state a claim, or, in the alternative, an order requiring Foss to allege which particular subsection of the UTPA it has violated; (2) dismissal of Foss's Fourth Counterclaim for fraud for failure to state a claim; and (3) a more definite statement regarding damages sought by Foss in paragraphs 10, 14, 18, 24, and 26, and in the prayer for relief.
I. UTPA Claim
FDS Marine argues that the court should dismiss this counterclaim in its entirety for failure to state a claim because the UTPA only protects individual consumers of goods and services and was never intended to cover commercial transactions between two businesses. Foss responds that even though it is a corporation rather than an individual, it was acting as a consumer when it hired FDS Marine to provide commercial diving and repair services, and thus its counterclaim is within the scope of the UTPA.
The first question is whether a corporation such as Foss may bring an action under the UTPA. The UTPA provides that:
[A]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of willful use or employment by another person of a method, act or practice declared unlawful by ORS 646.608, may bring an individual action in an appropriate court to recover actual damages or $200, whichever is greater.
ORS 646.638(1) (emphasis added).
"Person" as used in ORS 646.638(1) means "natural persons, corporations, trusts, partnerships, incorporate or unincorporated association, and any other legal entity except bodies of officers acting under statutory authority of this state or the United States." ORS 646.605(4) (emphasis added). It is apparent, therefore, that corporations such as Foss may bring an action under the UTPA. See e.g. Goodyear Tire Rubber Co v. Tualatin Tire Auto, Inc., 129 Or. App. 206, 217, 879 P.2d 193, 200 (1994), rev'd on other grounds, 322 Or. 406, 908 P.2d 300 (1995) (ORS 646.638(1) and 646.605(4) "clearly contemplate that a corporation may bring a private action against another corporation").
The second, and more complicated, issue concerns the subject matter of Foss's UTPA claim. Foss brings its UTPA claims under ORS 646.608(g)(t) (s) and 646.607. The latter statute provides that:
A person engages in an unlawful practice when in the course of the person's business, vocation or occupation the person: (1) Employs any unconscionable tactic in connection with sale, rental or other disposition of real estate, goods or services, or collection or enforcement of an obligation; or (2) Fails to deliver all or any portion of real estate, goods or services as promised, and upon request of the customer, fails to refund any money which has been received from the customer which was for the purchase of the undelivered real estate, goods or services and which is not retained by the seller pursuant to any right, claim or defense asserted in good faith. This subsection does not create a warranty obligation and shall not apply to a dispute over the quality of real estate, goods or services delivered to a customer.
The relevant portions of 646.608 provide that:
(1) A person engages in an unlawful practice when in the course of the person's business vocation or occupation the person does any of the following:
(g) Represents that real estate, goods or services are of a particular standard, quality, or grade, or that real estate or goods are of a particular style or model, if they are of another.
(t) Concurrent with tender or delivery of any real estate, goods or services fails to disclose any known material defect or material nonconformity.
(s) Makes false or misleading representations of fact concerning the offering price of, or the person's cost for real estate, goods or services.
ORS 646.605(6) defines "goods or services," as used in the UTPA, as "those which are or may be obtained primarily for personal, family or household purposes."
In Searle v. Exley Express, Inc., 278 Or. 535, 564 P.2d 1054 (1977), the plaintiff purchased a truck-tractor from the defendant company, was unhappy with the condition of the truck, and then tried to bring suit under the UTPA. The Oregon Supreme Court dismissed the action, finding that "if the subject matter of the sale is `real estate, goods, or services,' the Act purports to cover only those transactions in which the real estate, goods or services `are or may be used or bought primarily for personal, family or household purposes.'" Id at 538, 564 P.2d at 1055-56, quoting ORS 646.605(7) (now 646.605(6)). The Court further determined that even though it was convinced the plaintiff bought the truck for his personal use, the UTPA must be interpreted in an objective fashion:
If goods are customarily bought by a substantial number of purchasers for personal, family or household uses and were, in fact, bought by the plaintiff for his or someone else's use and not for resale, the statute applies. Certainly a truck designed for the business of hauling freight does not fall within that classification. The purchase of a truck to carry on a freight business may fulfill personal and family needs in a particular case but generally it would be purchased to carry on a business, and it is this customary or predominant purpose which is to used in characterizing the transaction.
Id at 540, 564 P.2d at 1056; see also Roach v. Mead, 301 Or. 383, 391, 722 P.2d 1229, 1234 (1986) (applying Searle to find defendant's legal services were not for personal use and so not covered by UTPA).
Foss's counterclaims involve the services and/or goods provided (or not provided) by FDS Marine in the course of its repair work on the ways. Thus, in order to state a claim under the UTPA, those goods and/or services must be the type of goods and services generally used for "personal, family or household" needs. See e.g., Searle, 278 Or at 538, 564 P.2d at 1055-56. That determination involves an analysis of the "customary or predominant purpose which is to used in characterizing the transaction." Id at 540, 564 P.2d at 1056. Here, FDS Marine's goods and/or services were not intended for "personal, family or household" use. Therefore, this claim is not properly within the reach of the UTPA. Instead, the Fifth Counterclaim should be dismissed for failure to state a claim and Maritime's alternate motion for a more definite UTPA claim should be denied as moot.
II. Fraud Claim
FDS Marine also moves to dismiss Foss's Fourth Counterclaim for fraud for failure to state a claim. It argues that because Foss failed to allege any damages resulting from the alleged fraud, the claim must fail. Foss has responded with an articulation of damages that is sufficiently precise to defeat FDS Marine's motion. Thus, FDS Marine's motion to dismiss Foss's Fourth Counterclaim should be denied.
III. More Definite Statement Regarding Damages
Lastly, FDS Marine moves for greater articulation of damages in general. In its response, however, Foss provides an adequate explanation of the damages sought, and, therefore, this motion, too, should be denied.
RECOMMENDATIONS
For the reasons set forth above, FDS Marine's Motions to Dismiss (docket #28) should be GRANTED IN PART and DENIED IN PART. FDS Marine's Motion to Dismiss Foss's Fifth Counterclaim for a violation of the UTPA should be GRANTED and the remainder of the motions should be DENIED.
SCHEDULING ORDER
Objections to the Findings and Recommendations, if any, are due April 19, 2001. If no objections are filed, then the Findings and Recommendations will be referred to a district court judge and go under advisement on that date.
If objections are filed, the response is due no later than May 4, 2001. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will be referred to a district court judge and go under advisement.