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Liberty Mutual Fire Insurance Co. v. Bernhard MCC, LLC

United States District Court, E.D. Louisiana

April 10, 2019

LIBERTY MUTUAL FIRE INSURANCE COMPANY
v.
BERNHARD MCC, LLC, ET AL.

         SECTION "F"

          ORDER AND REASONS

          MARTIN L. C. FELDMAN, UNITED STATES DISTRICT JUDGE.

         Before the Court are two motions by Reliance Worldwide Corporation: (1) Rule 12(b)(6) motion to dismiss Liberty Mutual's First amended complaint; and (2) Rule 12(b)(6) motion to dismiss Bernhard MCC, LLC's cross-claim; RWC seeks dismissal of some, but not all, of Liberty Mutual's claims and BMCC's cross-claims. For the reasons that follow, the motions are GRANTED.

         Background

         This litigation stems from a water intrusion that damaged the ACE Hotel in New Orleans.

         On August 13, 2017, several ACE Hotel rooms and their contents were allegedly damaged when a water pipe fitting ruptured.[1]Liberty Mutual Fire Insurance Company issued a policy of property insurance in favor of the ACE Hotel at 600 Carondelet Street. The policy obliges Liberty Mutual to pay proceeds for any losses attributable to water damage.[2] Claiming that certain pipe fittings failed causing the August 13 water intrusion, Liberty Mutual Fire Insurance Company sued, in state court, Reliance Worldwide Corporation (the pipe fitting manufacturer), Bernhard MCC, LLC (the pipe fitting installer and servicer), as well as their insurers, ABC Insurance Company, Inc. and The Travelers Indemnity Company. Liberty Mutual, as subrogee of the ACE Hotel, seeks to recover the proceeds in property damage it paid plus court costs and expert fees.

         Reliance Worldwide Corporation (RWC) removed the lawsuit to this Court, invoking the Court's diversity jurisdiction. Bernhard MCC, LLC (BMCC) answered the plaintiff's complaint and filed a crossclaim against RWC, alleging that RWC's plumbing fittings (called Sharkbite Push-fit Connection Systems) were unreasonably dangerous in construction or composition, unreasonably dangerous in design, unreasonably dangerous in the failure to conform to express warranties, and that RWC failed to warn (or insufficiently warned) that the design would (and did) cause damage; all theories of relief arising under the Louisiana Products Liability Act. RWC moved to dismiss the plaintiff's state court petition, and, in response, the plaintiff moved to amend its state court petition. On February 20, 2019, the Court granted RWC's motion to dismiss, dismissing the plaintiff's claims without prejudice, and the Court granted the plaintiff's motion to amend its complaint. RWC now moves to dismiss for failure to state a claim Liberty Mutual's construction or composition defect theory of recovery; RWC also now moves to dismiss for failure to state a claim BMCC's cross-claim alleging as theories of LPLA recovery construction or composition defect and breach of express warranty.

         I.

         Rule 12(b)(6) of the Federal Rules of Civil Procedure allows a party to move for dismissal of a complaint for failure to state a claim upon which relief can be granted. Such a motion is rarely granted because it is viewed with disfavor. See Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997) (quoting Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982)).

         Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009)(citing Fed.R.Civ.P. 8). "[T]he pleading standard Rule 8 announces does not require 'detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Id. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

         In considering a Rule 12(b)(6) motion, the Court “accept[s] all well-pleaded facts as true and view[s] all facts in the light most favorable to the plaintiff.” See Thompson v. City of Waco, Texas, 764 F.3d 500, 502 (5th Cir. 2014) (citing Doe ex rel. Magee v. Covington Cnty. Sch. Dist. ex rel. Keys, 675 F.3d 849, 854 (5th Cir. 2012)(en banc)). But, in deciding whether dismissal is warranted, the Court will not accept conclusory allegations in the complaint as true. Id. at 502-03 (citing Iqbal, 556 U.S. at 678).

         To survive dismissal, “‘a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009)(quoting Iqbal, 556 U.S. at 678)(internal quotation marks omitted). “Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Twombly, 550 U.S. at 555 (citations and footnote omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (“The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.”). This is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679. “Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Id. at 678 (internal quotations omitted) (citing Twombly, 550 U.S. at 557). “[A] plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief'”, thus, “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (alteration in original) (citation omitted).

         II. 3

         A.

         The LPLA provides “the exclusive remedy for products liability suits” under Louisiana law. See Demahy v. Schwarz Pharma, Inc., 702 F.3d 177, 182 (5th Cir. 2012); see also La. R.S. § 9:2800.52 (the LPLA provides “the exclusive theories of liability for manufacturers for damage caused by their products.”). To maintain a products liability action under the LPLA, a claimant must establish four elements: the defendant is the manufacturer of the product; the claimant's damage was proximately caused by a characteristic of the product; this characteristic made the product unreasonably dangerous; and the claimant's damage arose from a reasonably anticipated use of the product. Id. § 9:2800.54(A). The characteristic that makes the product unreasonably dangerous must exist at the time the product left control of the manufacturer. Id. And, a product is unreasonably dangerous “if and only if” it is so: 1) in construction or composition; 2) in design; 3) because of an inadequate warning; or 4) because it does not conform to an express warranty. La. R.S. § 9:2800.54(B)(1-4). The LPLA thus limits the plaintiff to these four theories of recovery.

         B.

         1. Defective Construction or Composition

         The defective construction/composition provision of the LPLA provides a remedy for harm caused by a product defect "due to a mistake in the manufacturing process." Stahl v. Novartis Pharmaceuticals Corp., 283 F.3d 254, 263 (5th Cir. 2002)(citing La.R.S. § 2800.55). Whether a product deviated from the manufacturer's specifications or performance standards for the product or from otherwise identical products manufactured by the same manufacturer is an inquiry distinct from whether a product's defect inheres in its design, such as where all units of the same product model suffer from the same inherent flaw. See Brocato v. DePuy Orotpaedics, Inc., No. 14-2607, 2015 WL 854150, at *3 (E.D. La. Feb. 25, 2015). If pursuing a construction/composition defect theory, the plaintiff must show that, at the time the product left the manufacturer's control, it deviated materially from the manufacturer's specifications or performance standards for the product or from otherwise identical products manufactured by the same manufacturer. La. R.S. § 9:2800.55. Or, in other words, the plaintiff must show that the particular Sharkbite fitting(s) that failed at the ACE Hotel either did not meet identified performance standards or specifications, or that it deviated from the construction or composition of identical Sharkbite fittings manufactured by RWC (that some manufacturing defect resulted in anomalous composition of the particular Sharkbite fitting used when compared with other Sharkbite fittings manufactured by RWC). By failing to identify the manufacturer's specifications or performance standards for Sharkbite fittings, or failing to indicate how the particular Sharkbite fitting(s) that failed materially deviated from those standards, the plaintiff (or cross-claimant) fails to state a cause of action for defective construction or composition under the LPLA.

         2. Defective Design

         Under the LPLA, a product's design is unreasonably dangerous if the plaintiff demonstrates that, at the time the product left the manufacturer's control, "[t]here existed an alternative design for the product that was capable of preventing the claimant's damage and that the danger of the damage outweighed the burden on the manufacturer of adopting the alternative design." Watson v. Bayer Healthcare Pharmaceuticals, Inc., No. 13-212, 2013 WL 1558328, at *4 (E.D. La. April 11, 2013)(Feldman, J.)(quoting La. R.S. ยง 9:2800.56)(citations omitted). The LPLA "does not allow a fact finder to presume an ...


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