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Acadia Insurance Co. v. Fluid Management, Inc.

United States District Court, D. Maine

June 23, 2015

ACADIA INSURANCE COMPANY, as subrogee of ELDREDGE LUMBER AND HARDWARE, INC., Plaintiff,
v.
FLUID MANAGEMENT, INC., et al., Defendants.

ORDER ON MOTION TO DISMISS

JOHN A. WOODCOCK, Jr., District Judge.

In this subrogation action, an insurance company filed a complaint against a paint mixer manufacturer and an electric motor manufacturer for a fire at a hardware store. The insurance company paid the hardware store owner in excess of $379, 996 for the loss and now seeks to recover that amount from these manufacturers. The electric motor manufacturer moves for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). The Court denies the motion because the insurer's complaint states a plausible claim for relief.

I. PROCEDURAL HISTORY

On November 20, 2014, Acadia Insurance Company (Acadia), as subrogee of Eldredge Lumber and Hardware (Eldredge Lumber), filed a complaint against Fluid Management and Merkle-Korff Industries (Merkle-Korff) in York County Superior Court, containing three counts: (1) negligence, (2) strict liability, and (3) breach of implied warranty of merchantability, all in violation of Maine law. Compl. at 4-6 (ECF No. 2-2). On December 19, 2014, Merkle-Korff filed its answer in York County Superior Court. Answer (ECF No. 2-3). On January 7, 2015, Merkle-Korff removed the case to this Court pursuant to 28 U.S.C. § 1332. Notice of Removal (ECF No. 1).

On January 18, 2015, Merkle-Korff filed a motion to dismiss the Complaint. Def. Merkle-Korff Industries, Inc.'s Mot. to Dismiss (ECF No. 14) ( Defs.' Mot. ). Acadia responded on February 16, 2015. Pl., Acadia Insurance Company a/s/o Eldredge Lumber and Hardware Inc.'s Opp'n to Def. Merkle Korff Industries, Inc.'s Mot. to Dismiss (ECF No. 15) ( Pl.'s Opp'n ). On March 3, 2015, Merkle-Korff replied. Def. Merkle-Korff Industries, Inc.'s Mot. to Dismiss Reply Mem. (ECF No. 17) ( Defs.' Reply ). On March 6, 2015, Fluid Management filed a motion to dismiss, joining in Merkle-Korff's motion.[1] Def. Fluid Management, Inc.'s Mot. to Dismiss (ECF No. 18).

II. THE ALLEGATIONS AND THEORIES OF ACTION IN THE COMPLAINT

A. The Allegations in the Complaint

Acadia is a New Hampshire insurance company licensed in Maine with its principal place of business in Maine. Compl. ¶ 1. Fluid Management is an Illinois corporation with its principal place of business in Illinois; Merkle-Korff is a Delaware corporation with its principal place of business in Delaware. Id. ¶¶ 3, 4.

Acadia says it insured Eldredge Lumber's property in York, Maine, namely a hardware store. Id. ¶¶ 2, 9. Acadia claims that before March 28, 2012, Eldredge Lumber purchased from Fluid Management an Accutinter Model 7016 paint mixer that contained an electric motor designed, manufactured, and sold by Merkle-Korff. Id. ¶¶ 7, 8. On March 18, 2012, Acadia says, the paint mixer and/or the electric motor malfunctioned and caused a fire. Id. ¶ 10. Acadia claims that the fire was caused by the failure of the paint mixer and/or its electric motor, and says that the fire caused significant damage to the hardware store and business income losses. Id. ¶¶ 11, 12. Acadia paid Eldredge Lumber in excess of $379, 996 for damages as a result of the fire, and it is pursuing the subrogated loss amount in this proceeding. Id. ¶¶ 13, 14.

B. The Counts

In Count One, Acadia alleges that the paint mixer and electric motor were defective and unreasonably dangerous to users or consumers and to their property, and that the defects caused the fire at the hardware store. Id. ¶¶ 16, 17. Acadia claims that the fire and damages Eldredge Lumber suffered were the result of the negligent design and manufacture of the paint mixer and electric motor. Id. ¶ 18.

In Count Two, Acadia seeks relief under Maine's product liability statute, 14 M.R.S. § 221. It says that Fluid Management sold the paint mixer and electric motor within it to its insured, Eldredge Lumber, in a defective condition unreasonably dangerous to users or consumers and to their property, and that Merkle-Korff sold the electric motor, that was supplied with the paint mixer, in a defective condition unreasonably dangerous to users or consumers and to their property. Id. ¶¶ 20, 21. Acadia submits that Fluid Management and Merkle-Korff should have reasonably expected Eldredge Lumber to be affected by the paint mixer and electric motor. Id. ¶ 22. Acadia alleges that Eldredge Lumber sustained damages as a direct and proximate cause of the Defendants' sale of the defective paint mixer and/or electric motor. Id. ¶ 22.

In Count Three, Acadia alleges that both Fluid Management and Merkle-Korff were "merchants" as defined in 11 M.R.S. § 2-104.1 and that they sold the paint mixer and electric motor in violation of their implied warranty of merchantability under 11 M.R.S. § 2-314. Id. ¶¶ 25, 26. Finally, Acadia says, Eldredge Lumber sustained damages as a direct and proximate result of the Defendants' breach of the implied warranty of merchantability. Id. ¶ 27.

III. THE PARTIES' POSITIONS

A. The Defendants' Motion to Dismiss

The Defendants' motion is premised on an argument that the Complaint states no facts that would plausibly show that a defect in a product they sold caused the fire at the hardware store. Defs.' Mot. at 4. They contend that Acadia's Complaint offers only "labels and conclusions" and "naked assertions" insufficient to survive its motion. Id.

Regarding the negligence count, the Defendants submit it is unclear from the Complaint how they breached a duty they owed to Acadia when they put the electric motor in the chain of commerce, or how that breach caused the fire. Id. at 5. Further, they argue, it is unclear whether Acadia seeks to recover for negligent design or negligent manufacture or both, because the Complaint does not describe or define what was defective about the paint mixer and/or electric motor. Id.

The Defendants contend that the strict liability claim in Count Two must also fail because Acadia has neither established that the product was defective, nor alleged any facts that would allow the Court to infer how the electric motor was defective. Id. at 6-7. The Defendants argue that "[m]ere allegations that the paint mixer or' the electric motor malfunctioned [are] not sufficient." Id. at 7.

Finally, the Defendants argue that Acadia failed to properly allege that the electric motor was defective at the time it was sold, and therefore the breach of warranty count must be dismissed. Id. They say that allegations that they are "merchants", that the motor was in a "defective condition", and that it was the cause of Plaintiff's injuries and damages, are insufficient under the Twombly [2] and Iqbal [3] pleading standards to survive dismissal. Id. at 8.

B. Acadia's Opposition

Acadia contends first that the Defendants' motion is untimely and should be denied. Pl.'s Opp'n at 3. Acadia says that a motion filed pursuant to Rule 12(b)(6) must be made before pleading if a responsive pleading is allowed, and that the Defendants' motion is untimely because Merkle-Korff filed it after filing its Answer. Id.

Second, Acadia maintains that it has properly pleaded claims for negligence, strict liability, and breach of implied warranty of merchantability, and that the Defendants' arguments are premature and more appropriate for a summary judgment motion. Id. at 4-10. Acadia submits that it does not need to offer a detailed explanation as to how the motor was negligently designed and/or manufactured, nor ...


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