Opinion
CV-18-53
08-08-2018
JAMES C. LABRECQUE d/b/a FLEXWARE CONTROL TECHNOLOGY Plaintiff, v. REFRIGERATION RESEARCH, INC. and JOHN DOE, an ASME National Board Inspector Defendants,
ORDER
Ann M. Murray, Justice
Before the Court is Defendant, Refrigeration Research, Inc.'s ("Refrigeration Research") Motion to Dismiss for Failure to State a Claim, filed pursuant to M.R. Civ. P. 12(b)(6). This case arises from the aftermath of the alleged failure of four high-pressure vessels sold by Refrigeration Research to Plaintiff James C. LaBrecque d/b/a Flexware Control Technology ("Flexware") for use in a grocery store refrigeration system.
Defendant "John Doe" is the as-yet-unidentified "inspector certified by the American Society of Mechanical Engineers (ASME) to verify testing and certification of high-pressure vessels prior to and condition precedent to A[SM]E certification of manufactured vessels." (Pl's Compl. ¶ 3.) (alteration added, )
On April 27, 2018, Flexware filed a Complaint alleging one count of Negligence against Refrigeration Research, two counts of Negligent Misrepresentation (one against each Defendant), two counts of Fraudulent Misrepresentation (one against each Defendant), and one count for Punitive Damages. The Complaint was served on Refrigeration Research, in Michigan, on May 4, 2018. Refrigeration Research argues that the economic loss doctrine bars Counts I and II, that Plaintiff has not pled Count IV (Fraud) with sufficient particularity, and that Count V (punitive damages) is not a viable cause of action under Maine law.
For the reasons that follow, the Court grants Refrigeration Research's Motion to Dismiss as to Counts I and II, but denies the Motion as to Count IV.
I. STANDARD OF REVIEW
"When a court decides a motion to dismiss, made pursuant to M.R. Civ. P. 12(b)(6), 'the material allegations must be taken as admitted."' Moody v. State Liquor & Lottery Comm'n, 2004 ME 20, ¶ 7, 843 A.2d 43 (citation omitted). Moreover, "[a] dismissal should only occur when it appears 'beyond doubt that a plaintiff is entitled to no relief under any set of facts that he might prove in support of his claim.'" Id. (citations omitted) (alteration added).
II. BACKGROUND
The following facts alleged in Flexware's Complaint are taken as admitted for purposes of resolving Refrigeration Research's 12(b)(6) Motion.
In April 2012, Flexware took delivery of four high-pressure vessels purchased from Refrigeration Research. (Pl's. Compl. ¶ 6.) On or about May 12, 2012, Flexware incorporated the vessels into a refrigeration system located within a grocery store in Holden, Maine. (Id. ¶ 7.)
Flexware provided Refrigeration Research with specific requirements necessary for the high-pressure vessels to be incorporated into the refrigeration system. (Id. ¶ 9.) Refrigeration Research knew or should have known that the refrigeration system was to be placed in a grocery store frequented by the public. (Id. ¶ 10.)
Refrigeration Research knew or should have known that the vessels were required to sustain working pressure of 450 pounds per square inch, (Id. ¶ 11.) The State of Maine has adopted and codified the ASME requirements and standards at 32 M.R.S. § 15101, et seq. (Id. ¶ 13.)
Refrigeration Research affixed to each vessel a metal plate which certified that the vessel complied with the ASME standards of design, fabrication, testing, and performance. (Id. ¶ 14.) Refrigeration Research knew or should have known the four vessels did not meet these ASME standards, (Id. ¶ 15.) Flexware relied on Refrigeration Research's affirmation, by ASME certification, that the four vessels would withstand an operating pressure of 450 pounds per square inch. (Id. ¶ 16.)
Refrigeration Research had a duty to construct the vessels in a workmanlike manner and in compliance with all applicable laws, rules, regulations, and mandates. (Id. ¶ 17.) Refrigeration Research breached its duty by failing to construct the vessels in compliance with ASME requirements, which are mandated by Maine law. (Id. ¶ 18.)
As a direct and foreseeable result of Refrigeration Research's false representation, by ASME certification, as to the working pressure capacity, and Refrigeration Research's breach of its duty owed Flexware, Flexware suffered damages when the vessels failed at a working pressure at or near half the pressure Refrigeration Research certified. This created an unreasonable and foreseeable risk of injury due to explosion, and Refrigeration Research's breach of its duty was the proximate cause. (Id. ¶¶ 20-21.)
III. ANALYSIS
Negligence
The Court finds that Plaintiffs negligence claim is precluded under the economic loss doctrine expressly adopted by the Law Court. See Oceanside at Pine Point Condominium Owners Ass'n v. Peachtree Doors, 659 A.2d 267, 270 (Me. 1995) (tort recovery is not permitted for a defective product's damage to itself; such losses are purely economic). The Law Court held:
The rationale underlying this rule is that damages to a product itself "means simply that the product has not met the customer's expectations, or, in other words, that the customer has received 'insufficient product value.' The maintenance of product value and quality is precisely the purpose of express and implied warranties."Id. (quoting E. River S.S. Corp. v. Transamerica Delava 476 U.S, 858, 872, 106 S.Ct. 2295, 90 L.Ed. 865) (citation omitted), Flexware has not alleged that any explosion did, in fact, occur, causing some other injury, nor has Flexware alleged any injury other than the failure of the vessels themselves. Flexware seeks to make something of the allegation that the vessels could have exploded and harmed others. Courts in other jurisdictions have reached varying results as to whether a so-called "near miss" event should be beyond the limitations of the economic loss doctrine, and the Law Court did not have the opportunity to address this distinction in Oceanside. However, the Oceanside court nevertheless cited to the unanimous opinion of the U.S. Supreme Court in the Admiralty case of East River S.S. Corp, and the further relevant reasoning there is quite on point here. See East River S.S. Corp. v. Transamerica Delaval, 476 U.S. 858, 870, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986) ("The intermediate positions, which essentially turn on the degree of risk, are too indeterminate to enable manufacturers easily to stricture their business behavior. Nor do we find persuasive a distinction that rests on the manner in which the product is injured. We realize that the damage may be qualitative, occurring through gradual deterioration or internal breakage. Or it may be calamitous . . . But either way, since by definition no person or other property is damaged, the resulting loss is purely economic") (ellipses added) (citations omitted).
Indeed, the Court believes that the Law Court would look again to East River S.S. Corp. in concluding that under Maine law, the presence of threatened but unrealized injury is not sufficient to somehow exempt this case from the application of the economic loss doctrine. For this reason, the Court dismisses Count l.
At oral argument on the Motion to Dismiss, counsel for Defendant cited a case from the U.S. District Court for Massachusetts, construing pertinent Maine and Massachusetts law. The reasoning there supports this Court's conclusion. See Sebago v. Beazer East, Inc., 18 F.Supp.2d 70, 95 (D. Mass. 1998) ("Upon review of the relevant decisions, and in recognition that the majority of state courts have not adopted an unreasonably dangerous exception to the economic loss doctrine, the court concludes that it is not reasonably clear that the highest courts of Maine and Massachusetts would hold that such an exception exists").
Negligent Misrepresentation (Refrigeration Research)
The Plaintiffs claim of Negligent Misrepresentation against Refrigeration Research is also not permitted for the same reason the Negligence claim fails. Refrigeration Research correctly notes that summary judgment was affirmed by the Law Court in Oceanside, against a claim of negligent misrepresentation, pursuant to the economic loss doctrine. See Oceanside at Pine Point Condominium Owners Ass'n, 659 A.2d 267, 273. For these reasons, the Court dismisses Count II.
Fraud (Refrigeration Research)
Defendant Refrigeration Research argues that Plaintiff has not pled fraud with sufficient particularity.
In Maine, a cause of action for fraudulent misrepresentation requires proof by clear and convincing evidence (1) that defendant made a false representation (2) of material fact (3) with knowledge or its falsity or in reckless disregard of whether it is true or false (4) for the purpose of inducing Plaintiff to act in reliance upon it, and Plaintiff justifiably relied upon the representation as true and acted upon it to its damage. Me. Eye Care Assocs. P.A. v Gorman, 2006 ME 15, 19, 890 A.2d 707.
M.R. Civ. P. 9(b) provides:
In all averments of fraud .. ., the circumstances constituting fraud . .. shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally."The misrepresentation itself, including its materiality, the reliance thereon and the damages resulting therefrom, must be set forth with particularity." 2 Harvey, Maine Civil Practice, § 9.2 at 384 (3d ed. 2011).
Flexware alleged the following in its Complaint:
40. The Defendant, Refrigeration Research, Inc., made false representations of material facts when said Defendant placed, or caused to have placed, a certification plate on each of the vessels which certified each vessel had been tested and inspected in accordance with ASME standards to withstand an operational working pressure of 450 pounds per square inch. (Id. ¶ 40.)
41. The Defendant knew the facts were false or acted in reckless disregard for their truth or falsity by attaching the ASME certification plate on each of the four high-pressure vessels stating that said high-pressure vessels were certified to and capable of withstanding an operational working pressure of 450 pounds per square inch and the Defendant, Refrigeration Research, Inc., knew or with reckless disregard for the truth or falsity of the fact that the high-pressure vessels were manufactured in a manner that each [of] the four high-pressure vessels could not reach or maintain an operational working pressure of 450 pounds per square inch without substantial risk of explosion or implosion. (Id. ¶ 41.) (alteration added.)
42. The Defendant made the false representations stated upon the ASME certification plates for the purpose of inducing the Plaintiff to act in reliance upon said false representations and install the high-pressure vessels as an integral part of a system requiring said vessels to withstand an operational working pressure of 450 pounds per square inch. (Id. ¶ 42.)
43. The Plaintiff reasonably relied on the false representations the Defendant, Refrigeration Research, Inc., stated on the ASME certification plates as it is customary industry standard for those similarly situated as the Plaintiff to rely on said AMSE certification plates for true and accurate information concerning the operational limits of such high-pressure vessels and said reliance resulted in substantial detriment to Plaintiff. (Id. ¶ 43.)
The Court is satisfied that Plaintiff has alleged with sufficient particularity the misrepresentations, the materiality thereof, and the reliance thereon. However, the Court is not satisfied that Plaintiff has alleged with sufficient particularity the damages resulting from the misrepresentation. The Plaintiff has alleged Defendant's knowledge and intent generally, and Rule 9(b) permits intent, knowledge, and other condition of mind to be averred generally.
The Court will permit Flexware to file an Amended Complaint as to Count IV, and it must do so within 20 days of the date of this Order. Plaintiffs' claim for punitive damages may be considered as part of Count IV.
The entry is:
1. Defendant (Refrigeration Research's) Motion to Dismiss Counts I and II is granted.
2. Defendant's Motion to Dismiss Count IV is denied. Plaintiff may file an Amended Complaint against Defendant Refrigeration Research, within 20 days of the date of this Order.
3. The Clerk is directed to incorporate this Order into the docket by reference pursuant to M.R. Civ. P. 79(a).
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