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Cover v. Windsor Surry Co.

United States District Court, N.D. California

June 22, 2016

MCLANE COVER, Plaintiff,
v.
WINDSOR SURRY COMPANY, et al., Defendants.

          ORDER REGARDING MOTION TO DISMISS AND MOTION TO STRIKE RE: DKT. NOS. 69, 70

          WILLIAM H. ORRICK United States District Judge.

         INTRODUCTION

         For the fourth time, defendants Windsor Surry Company, d/b/a WindsorONE, and Windsor Willits Company, d/b/a Windsor Mill (collectively "Windsor") move to dismiss plaintiff McLane Cover's complaint alleging misrepresentations regarding WindsorONE trim board, a housing trim product. In response to an earlier motion, I conducted an extensive choice of law analysis and determined that Rhode Island law applies to Cover's claims. Cover's third amended complaint ("TAC") both adds to and changes prior allegations, asserting that Cover is resident of Massachusetts and not Rhode Island and that he reviewed Windsor's marketing materials from his home in Massachusetts. Even considering Cover's newly alleged facts, Rhode Island law applies to his claims. His California and Massachusetts law claims are dismissed. Additionally, his Rhode Island consumer protection claim falls under an exemption to the statute and is dismissed. His remaining claims for breach of express warranty and implied warranty of merchantability are plausibly pleaded. Windsor's motion to dismiss is GRANTED IN PART and DENIED IN PART. Windsor's motion to strike is DENIED because it is premature with respect to some issues and unnecessary with respect to others.

         BACKGROUND

         The background of this case has been described in previous orders. Dkt. Nos. 37, 67. In short, Windsor manufactures WindsorONE trim board. TAC ¶ 1 [Dkt. No. 68]. Trim boards are a finger jointed product, meaning that each board is made of several shorter boards that are joined together using finger joints and adhesive. Id. ¶ 28. Cover bought and installed WindsorONE trim board on the exterior of his home in Rhode Island. Id. ¶ 72. He alleges that Windsor made misrepresentations about its trim board in advertising and marketing materials, including statements about its wood quality and performance. Id. ¶¶ 30-38.

         Cover alleges that prior to installation and purchase, he relied on the recommendations of his architect, contractor, and carpenter, all of whom were familiar with the product, including its "marketing material and warranty." Id. ¶ 66. His architect and master carpenter provided him with a compact disc ("CD") containing interactive information regarding WindsorONE products. Id. ¶¶ 67-70. He reviewed the CD from his home in Massachusetts. Id. ¶ 66. "The marketing material [on the CD] is what led the architect and carpenter to recommend the product to [Cover] for his use and purchase, and plaintiff relied upon those materials to make his purchase." Id. ¶ 68. He contends that contrary to Windsor's representations, the trim board is made with "low performance" pine, the adhesive is non-waterproof, and the product began to rot "well before its represented useful or warranted life." Id. ¶¶ 40, 42, 47. These defects caused "premature decay, rotting, splitting, warping, and discoloration damage" to the trim board installed on his home. Id. ¶ 49.

         The TAC alleges five causes of action: (1) violation of Rhode Island's Deceptive Trade Practices Act, or in the alternative, violation of the Massachusetts Consumer Protection Act; (2) breach of express warranty; (3) breach of implied warranty of merchantability; (4) negligence (asserted under both Rhode Island and California law); and (5) declaratory relief. Cover seeks to represent a nationwide class either defined as "All persons and entities in the United States that own or owned homes, apartments, office buildings or other structures in which Trim Board is or was installed, " or a more limited class encompassing "All persons and entities in Rhode Island or Massachusetts who own or owned homes, apartments, office buildings or other structures in which Trim Board is or was installed." Id. ¶¶ 14, 17.

         Windsor filed a motion to dismiss all but the declaratory relief claim. Dkt. No. 69. [Mot.]. It also filed a motion to strike references to California law, injunctive relief, and Cover's nationwide and Massachusetts class allegations. Dkt. No. 70. I heard argument on May 18, 2016.

         LEGAL STANDARD

         I. MOTION TO DISMISS

         A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A complaint "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted). A claim is facially plausible when it "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. In considering whether the complaint is sufficient to state a claim, the court accepts as true all factual allegations contained in the complaint. Id. However, the court need not accept as true "allegations that contradict matters properly subject to judicial notice." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotation marks omitted). "Nor is the court required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Id. "[I]t is within [the court's] wheelhouse to reject, as implausible, allegations that are too speculative to warrant further factual development." Dahlia v. Rodriguez, 735 F.3d 1060, 1076 (9th Cir. 2013).

         II. HEIGHTENED PLEADING STANDARD FOR FRAUD OR MISTAKE

         Claims sounding in fraud or mistake are subject to the heightened pleading standard of Federal Rule of Civil Procedure 9(b), which requires that such claims "state with particularity the circumstances constituting fraud or mistake." Fed.R.Civ.P. 9(b). To satisfy this standard, a plaintiff must identify "the time, place, and content of [the] alleged misrepresentation [s], " as well as the "circumstances indicating falseness" or "manner in which the representations at issue were false and misleading." In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1547-48 (9th Cir. 1994) (internal quotation marks and modifications omitted). The allegations "must be specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong." Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th Cir. 2007).

         III. MOTION TO STRIKE

         Federal Rule of Civil Procedure 12(f) provides that "[t] he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). "Motions to strike are regarded with disfavor because they are often used as delaying tactics and because of the limited importance of pleadings in federal practice. The possibility that issues will be unnecessarily complicated or that superfluous pleadings will cause the trier of fact to draw unwarranted inferences at trial is the type of prejudice that is sufficient to support the granting of a motion to strike." Ayat v. Societe Air France, No. 06-cv-01574, 2007 WL 1840923, at * 1 (N.D. Cal. June 27, 2007) (citations omitted).

         DISCUSSION

         I. MOTION TO DISMISS

         A. Massachusetts and California Law Claims

         In response to Windsor's third motion to dismiss, I conducted an extensive choice of law analysis, determined that Rhode Island law applied to Cover's claims, dismissed Cover's consumer protection claims based on California law and provided him with leave to amend to add parallel claims based on Rhode Island law. Dkt. No. 67 at 22 (specifying that Cover may amend to add any "Rhode Island-specific claims, such as statutory consumer protection claims"). Remarkably, the TAC contains a Massachusetts Consumer Protection Act ("CPA") claim. TAC ¶¶ 97- 108.

         There are two reasons to dismiss this claim. First, pursuant to Rule 15(a), a plaintiff may amend its complaint as matter of course only within certain circumstances, none of which is applicable to this case. Otherwise, plaintiff must seek leave of the court or the opposing party's written consent. "Only an amended complaint that is properly filed pursuant to the requirements of Rule 15 requirements can supersede the original." Taa v. Chase Home Finance, LLC, No. 5:11-cv-00554-EJD, 2012 WL 507430 at *1 (N.D. Cal., Feb. 15, 2012). An amended complaint that has been filed without leave of court or consent of the defendants is without legal effect.

         Federal district courts have occasionally considered new claims submitted in an amended complaint where a previous dismissal granted leave to amend without limitation. DeLeon v. Wells Fargo Bank, N.A., No. 10-CV-01390-LHK, 2010 WL 4285006, at *3 (N.D. Cal. Oct. 22, 2010) (citing cases). But in cases like this one, where "leave to amend is given to cure deficiencies in certain specified claims, courts have agreed that new claims alleged for the first time in the amended pleading should be dismissed or stricken." Id. Cover's Massachusetts CPA claim exceeds the scope of allowable amendment under my previous order. Because Cover failed to secure Windsor's consent or seek leave of court to amend his pleadings, Windsor's motion to dismiss this claim is GRANTED.

         Second, even if I considered Cover's new allegations they do not change the result of the choice of law analysis that Rhode Island law applies. Although Cover had alleged in his previous complaint that he was a resident of Rhode Island, he now asserts that he is a Massachusetts resident and that the Rhode Island house at issue is simply a vacation home. TAC ¶ 6. Cover also alleges that he "received and reviewed recommendations from his architect, contractor, and carpenter and selected the faulty Trim Board from his home in Massachusetts." Id. ¶ 66. In addition, the TAC specifies that the architectural firm Cover employed is headquartered in Massachusetts. Id. ¶ 34. The TAC does not indicate the location from which the materials were originally disseminated or communicated. Beyond a tangential reference that the architectural firm he employed is headquartered in Massachusetts, the operative complaint contains no allegation that Windsor distributed or marketed its materials in Massachusetts.

         As I explained in my previous order, a choice of law analysis involves a three-part "government interest" test. McCann v. Foster Wheeler LLC, 48 Cal.4th 68, 87-88 (2010) (internal citations and quotation marks omitted). First, the court determines whether there are material differences between the relevant law of each of the potentially affected jurisdictions. Id. Second, if there is a difference, the court examines the interests of each jurisdiction in the application of its own law. Id. Third, the court "evaluates and compares the nature and strength of the interest of each jurisdiction in the application of its own law to determine which state's interest would be more impaired if its policy were subordinated to the policy of the other state." Id. Concerning California's choice of law rules, the Ninth Circuit has said that "with respect to regulating or affecting conduct within its borders, the place of the wrong has the predominant interest." Mazza v. Am. Honda Motor Co., 666 F.3d 581, 593 (9th Cir. 2012). California considers the "place of the wrong" to be the state where the last event necessary to liability occurred. Id.

         I previously analyzed the material differences between California and Rhode Island law relevant to Cover's claims, including differences in privity requirements, statutes of limitation, and available damages. Dkt. No. 67. I examined each state's interest in applying its own laws and determined that the application of Rhode Island law was appropriate. I noted that pursuant to Mazza, the last events necessary for triggering liability, in this case "the communication of ...


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