Opinion
No. 97-775, c/w 97-803, c/w 98-2200, Section: "R"(4).
January 2, 2001.
ORDER AND REASONS
Before the Court is Grinnell Corporation's motion for reconsideration of the Court's November 3, 2000 order in which the Court denied Grinnell's motion for summary judgment on plaintiffs' breach of warranty and breach of contract claims. In the alternative, Grinnell moves to compel arbitration of plaintiffs' claims and requests a stay of these proceedings. For the following reasons, the Court denies Grinnell's motion for reconsideration and denies Grinnell's motion to compel arbitration.
I. Background
On November 3, 2000, the Court granted in part and denied in part Grinnell Corporation's motion for summary judgment. The Court found that while the Louisiana Products Liability Act exclusively defines the scope of Grinnell's tortious liability for any damage caused by its sprinkler system, it does not foreclose Grinnell's accountability for its contractual obligations. The Court further found that plaintiff's had a viable contract claim against Grinnell based on Grinnell's assumption of all of the obligations and responsibilities that Broadmoor had assumed toward West Coast Liquidators, Inc. The Court therefore denied Grinnell's motion for summary judgment on plaintiffs' claims for breach of contract and breach of warranty.
Grinnell now moves the Court to reconsider its opinion. It argues that the LPLA specifies the exclusive theories of liability for damage caused by a manufacturer's products. Therefore, the Court must dismiss plaintiffs' non-LPLA breach of warranty and breach of contract claims. Moreover, Grinnell argues, plaintiff's never alleged any claims for breach of contract in their complaint. Grinnell also argues that plaintiffs' breach of contract claim should be dismissed because it is not manifestly clear that Grinnell intended to stipulate a benefit in favor of WCL, that there was due consideration for the third-party benefit, or that the benefit was not merely incidental. In the alternative, Grinnell moves to compel arbitration of plaintiffs' claims and requests a stay of these proceedings.
II. Discussion
A. Reconsideration
Although the Federal Rules of Civil Procedure do not formally recognize a motion to reconsider in haec verba, the Fifth Circuit has held that a motion to reconsider a dispositive pretrial motion may be classified under either Rule 59 or Rule 60, depending upon the time of filing. See Pryor v. United States Postal Service, 769 F.2d 281, 285 (5th Cir. 1985); Lavespere v. Niagra Mach. Tool Works, Inc., 910 F.2d 167, 173 (5th Cir. 1990), abrogated on other grounds by Little v. Liquid Air Corp., 37 F.3d 1069, 1075 n. 14 (5th Cir. 1994) (en banc). As Grinnell filed this motion for reconsideration seventeen days after judgment, the motion falls under Rule 60(b) as a motion for "relief from judgment." See Lavespere, 910 F.3d at 173. Under Rule 60(b) a court will grant relief from a final judgment or order only upon a showing of one of:
(1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment.
B. Breach of Warranty and Breach of Contract Claims
Grinnell first moves the Court to reconsider its November 3, 2000 order.
1. LPLA Exclusivity
Grinnell argues that the LPLA specifies the exclusive theories of liability for damage caused by a manufacturer's products. Therefore, it asserts, the Court must dismiss plaintiffs' non-LPLA breach of warranty and breach of contract claims. Grinnell's reasoning, however, ignores the Court's explanation in its November 3, 2000 order: "[a]lthough the LPLA defines the scope of Grinnell's tortious liability, it does not foreclose Grinnell's accountability for its contractual obligations." McAuslin v. Grinnell Corp., 2000 WL 1655242, at *6 (E.D. La. Nov. 3, 2000) (emphasis added).
Louisiana Revised Statutes section 9:2800.52 provides that the LPLA
establishes the exclusive theories of liability for manufacturers for damage caused by their products. A claimant may not recover from a manufacturer for damage caused by a product on the basis of any theory of liability that is not set forth in this Chapter. Conduct or circumstances that result in liability under this Chapter are "fault" within the meaning of Civil Code Article 2315 .
LA. REV. STAT. § 9:2800.52 (emphasis added). It is this critical "fault" trigger that belies Grinnell's reasoning. While the LPLA governs products liability in tort, it does not preclude recovery for economic loss arising from breach of warranty or breach of contract. See In re Air Bag Prods. Liab. Litig., 7 F. Supp.2d 792, 802 (E.D.La. 1998) (Feldman, J.) ("The LPLA provides the sole statutory model for plaintiffs' tort claims."); In re Ford Motor Co. Vehicle Paint Litig., 1996 WL 426548, at *16 n. 3 (E.D.La. July 30, 1996) (Vance, J.) ("The preemptive force of the LPLA extends to claims based on tort duties; thus, the Act does not bar redhibition actions, which are based on warranty theories."); Textron Marine Sys. v. KHD Deutz Motor Industriemotoren GmbH, 1994 WL 518279, at *2 (E.D.La. Sept. 22, 1994) (Livaudais, J.) ("[T]he LPLA governs products liability in tort . . . (quoting John N. Kennedy, A Primer on the Louisiana Liability Act, 49 LA. L.E.V. 565, 580 (1989)) (a drafter of the LPLA)); Morris v. United Servs. Auto. Ass'n, 756 So.2d 549, 561 (La.App. 2d Cir. 2000) ("The LPLA is the exclusive form of recovery against a manufacturer only for those damages as defined by the Act; the Act does not preclude recovery from a manufacturer for damages for economic loss due in a redhibition claim."); Draten v. Winn Dixie of La., Inc., 652 So.2d 675, 678 (La.App. 1st Cir. 1995) (same); Monk v. Scott Truck Tractor, 619 So.2d 890, 893 (La.App. 3d Cir. 1993) (same). Therefore, the Court rejects Grinnell's contention that it must dismiss plaintiffs' claims for breach of warranty and breach of contract.
2. Complaint
Grinnell further argues that plaintiff's never alleged any claims for breach of contract in their complaint. Federal Rule of Civil Procedure 8 (a) requires "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a). Accordingly, plaintiffs' complaint need only provide notice of the circumstances giving rise to their claim and set forth enough information to outline the elements of their claim or permit inferences to be drawn that these elements exist. See Beanal v. Freeport-McMoran, Inc., 197 F.3d 161, 164 (5th Cir. 1999). As the demand for judgment is not considered part of the claim, selection of an improper remedy in the demand is not fatal to plaintiffs' pleading so long as the statement of their claim indicates they are entitled to some other type of relief. See Laird v. Integrated Res., 897 F.2d 826, 841 n. 69 (5th Cir. 1990).
Here, plaintiffs' complaint includes a claim for breach of warranty against Grinnell. (Pls.' Mem. Opp'n Def.'s Mot. Recons., Ex. A at 6.) Plaintiffs' complaint also addresses Grinnell's contractual relationships and responsibilities in two paragraphs. Paragraph XIII of the complaint states:
Grinnell . . . was, and now is, a Delaware corporation . . . who at all material times was a subcontractor to Broadmoor Corporation and was hired and paid to design and install the warehouse fire protection system at the warehouse, including but not limited to, an automatic fire sprinkler system.
( Id., Ex. A at 5-6.) And paragraph XIV states:
In connection with Grinnell's work as subcontractor to Broadmoor Corporation, Grinnell designed and installed the below ground fire water system, which included preparation of the soil, and design and installation of the water supply pipes from the city water source to the warehouse.
(Id., Ex. A at 6.) Although plaintiff's do not specify in their complaint whether the legal theory supporting their claim for breach of warranty arises in contract or in tort, the claim provided Grinnell with sufficient notice regardless of the underlying legal theory. The complaint also put Grinnell on notice of the contractual relationship between Grinnell and Broadmoor, which, by itself, could be liberally construed as providing sufficient notice of plaintiffs' claim for breach of contract. Moreover, notwithstanding that liberal construction, Grinnell has had ample notice of plaintiffs' breach of contract claim, and it presents no evidence of prejudice or unfair surprise. Therefore, the Court finds that Grinnell has had sufficient notice of plaintiffs' breach of contract claim.
3. Third-Party Benefits
Grinnell also argues that plaintiffs' breach of contract claim should be dismissed because it is not manifestly clear (1) that Grinnell intended to stipulate a benefit in favor of WCL, (2) that there was due consideration for the third-party benefit, or (3) that the benefit was not merely incidental. The Court previously found that WCL had a viable claim as a third-party beneficiary of the Grinnell-Broadmoor subcontract, and Grinnell provides the Court with no basis to alter that conclusion. As the Court pointed out, the second paragraph of Grinnell's subcontract with Broadmoor provides:
[Grinnell] has read and is thoroughly familiar with said Contract Documents[, which include the contract between WCL and Broadmoor,] and agrees to be bound to [Broadmoor] by the terms of said Contract Documents insofar as they relate in any part or in any way to the work undertaken herein, and to assume towards [Broadmoor], in connection with the work covered by this subcontract, all the obligations and responsibilities which [Broadmoor] by those documents assumes towards [WCL] or anyone else.McAuslin v. Grinnell Corp., 2000 WL 1655242, at *6 (E.D. La. Nov. 3, 2000) (quoting Grinnell's Mem. Supp. Mot. Summ. J., Ex. 11 at 1.). Clearly, this language supports the contention that Grinnell explicitly assumed certain obligations and responsibilities for the benefit of WCL as a third-party beneficiary, and Grinnell's arguments now do not persuade the Court otherwise. See id. (citing Paul v. Louisiana State Employees' Group Benefit Program, 762 So.2d 136, 140 (La.App. 1st Cir. 2000)).
The contractual context supports the theory that Grinnell stipulated a benefit for WCL when it assumed all of the obligations and responsibilities that Broadmoor had assumed towards WCL. While that benefit would not flow directly from Grinnell to WCL, WCL was the ultimate beneficiary nonetheless. Further, there was due consideration for the third-party benefit because in return for assuming those obligations and responsibilities, Grinnell secured other benefits. Finally, WCL's interests were not merely incidental to the subcontract because WCL was the ultimate beneficiary of the work performed under the subcontract. Therefore, the Court rejects Grinnell's motion to reconsider its denial of summary judgment on plaintiffs' breach of contract claim.
C. Arbitration
In the alternative, Grinnell moves to compel arbitration of plaintiffs' claims and requests a stay of these proceedings. Relying on a recent Fifth Circuit opinion, Grigson v. Creative Artists Agency, L.L.C., 210 F.3d 524 (5th Cir. 2000), Grinnell contends that pursuant to the doctrine of equitable estoppel it may trigger the arbitration clause in WCL's contract with Broadmoor because plaintiffs' claims are intertwined with, and dependent upon, that contract.
Even assuming that plaintiffs' claims against Grinnell are intertwined with WCL's contract with Broadmoor, "the right to arbitration, like any other contract right, can be waived." Williams v. CIGNA Fin. Advisors, Inc., 56 F.3d 656, 661 (5th Cir. 1995) (quoting Miller Brewing Co. v. Fort Worth Distrib. Co., 781 F.2d 494, 497 (5th Cir. 1986)). Although plaintiff's bear a heavy burden to prove that Grinnell waived its right to arbitration, "[w]aiver will be found when the party seeking arbitration substantially invokes the judicial process to the detriment or prejudice of the other party." Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324, 326 (5th Cir. 1999) (quoting Miller Brewing, 781 F.2d at 497). Here, Grinnell waived its purported right to arbitrate because for over three and a half years it has actively participated in this lawsuit and filed numerous motions, including motions for summary judgment. See Miller Brewing, 781 F.2d at 497 ("A party waives his right to arbitrate when he actively participates in a lawsuit or takes other action inconsistent with that right." (quoting Cornell Co. v. Barber Ross Co., 360 F.2d 512, 513 (D.C. Cir. 1966))); E.C. Ernst, Inc. v. Manhattan Constr. Co. of Texas, 559 F.2d 268, 269 (5th Cir. 1977) (per curiam) ("Substantially invoking the litigation machinery qualifies as the kind of prejudice . . . that is the essence of waiver."). To compel arbitration and stay these proceedings virtually on the eve of trial would materially prejudice the other parties. Therefore, the Court denies Grinnell's motion to compel arbitration and stay these proceedings.
III. Conclusion
For the foregoing reasons, the Court denies Grinnell Corporation's motion for reconsideration and denies Grinnell Corporation's motion to compel arbitration.