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June 23, 2000


The opinion of the court was delivered by: Robert F. Kelly, District Judge.


This action arises put of an agreement pursuant to which Plaintiff Constar, Inc. ("Constar") rented 100,000 square feet of space in the warehouse of Defendant National Distributions Center, Inc. ("NDC") for storage of pallets of empty bottles which Constar manufactured for sale to various beverage producers. Constar's Complaint asserts claims for negligence, warehouseman's liability, bailment, and breach of contract in connection with this agreement. NDC filed a Motion to Dismiss, which was denied by Order dated December 23, 1999. On December 30, 1999, NDC filed an Answer with counterclaims of fraud, negligent misrepresentation, negligence, promissory estoppel and unjust enrichment. Constar then filed the present Motion to Dismiss NDC's counterclaims for failure to state a claim upon which relief could be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) on January 19, 2000.*fn1 For the reasons that follow, the Motion is granted in part and denied in part.


In support of its counterclaims, NDC states the following facts. Constar, which operates out of Charlotte, North Carolina, manufactures plastic bottles which beverage manufacturers use to bottle their products. NDC operates warehouses throughout the United States. In February, 1999, Constar requested that NDC provide warehouse facilities and services to Constar in Charlotte, North Carolina. Constar indicated that it needed approximately 100,000 square feet in which to store its products. Constar allegedly stated that it needed this warehouse space on an emergency basis. The parties entered into an agreement, whereby Constar would pay $.038 per square foot per month with a minimum monthly charge of $38,000 for 100,000 square feet, plus $3.50 handling rate per pallet, plus certain labor rates based upon a 7 day/20 hour per week coverage.

NDC claims it built a warehouse in Charlotte, North Carolina in order to accommodate Constar, which Constar allegedly inspected and approved as acceptable to house its goods. Constar allegedly insisted that NDC begin to store its pallets of bottles on the first day of Constar's lease, despite the fact that Constar knew it normally takes four to six weeks to prepare a warehouse to receive goods. NDC claims it asked Constar to wait four to six weeks, but Constar refused.

NDC claims that Constar withheld material information from NDC regarding Constar's improper packaging of its pallets, which made the pallets easy to damage. Specifically, NDC claims that Constar failed to tell it that its shrink wrap machine was defective, that its employees were improperly shrink-wrapping the pallets, that its employees were applying improper tension on the packing straps, and that Constar's own warehouse contained many damaged pallets caused by Constar. NDC claims Constar was aware of all of these alleged facts.

Moreover, NDC claims that Constar intended to ship pallets to NDC with approximately 350 different SKU's ("stock keeping units") of different brands of labels of plastic bottles, but did not intend to pay for the extra 50,000 square feet of space needed to properly handle these different SKU's. NDC also claims that Constar knew that the number of pallets it was shipping to NDC could not be handled on a 20 hour/7 day per week basis, as provided in the contract.

NDC claims it was forced to provide the required 150,000 square feet per month of space to accommodate Constar's shipments. Constar allegedly refused to pay for the 50,000 square feet of extra space. NDC also claims it was forced to provide 24 hour warehouse service seven days per week, but that Constar refused to pay for this service. Constar allegedly requested that NDC accept damaged pallets, and refused to accept these damaged pallets when NDC attempted to return them to Constar. NDC was therefore forced to store these pallets, but Constar did not pay for the storage. NDC also claims that because Constar's shrink-wrap procedures were defective, NDC was forced to remove Constar's shrink-wrapping, and rewrap the pallets by hand. NDC claims it repaired other damaged pallets as well. Although Constar allegedly gave NDC instructions for repairing these damaged pallets, Constar refused to pay for any of these efforts. NDC also claims that Constar failed to correct its drivers who were not following their established schedules in picking up pallets from the warehouse. Accordingly, NDC claims that Constar wrongfully attempts to blame NDC for damage to pallets for which Constar is responsible.


A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the pleading. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Johnsrud v. Carter, 620 F.2d 29, 32 (3d Cir. 1980). A court must determine whether the party making the claim would be entitled to relief under any set of facts which could be established in support of the claim. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984). "When deciding a 12(b)(6) motion to dismiss, the counterclaims must be read in a light most favorable to the counter-claimant, and all of the factual allegations must be taken as true." Government Guarantee Fund of the Republic of Finland v. Hyatt Corp., 955 F. Supp. 441, 449 (Vi. 1997) (citing Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988); Fleming v. Lind-Waldock & Co., 922 F.2d 20, 23 (1st Cir. 1990)). However, "legal conclusions, deductions or opinions couched as factual allegations are not given a presumption of truthfulness." Id.


A. Negligence.

Constar correctly argues that NDC's negligence claim is barred by the economic loss doctrine. This doctrine prohibits recovery in tort for economic losses to which the party's entitlement "flows only from a contract." Factory Mkt., Inc. v. Schuller Intern., Inc., 987 F. Supp. 387, 395 (E.D.Pa. 1997) (quoting Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 618 (3d Cir. 1995)). "The rationale of the economic loss rule is that tort law is not intended to compensate parties for losses suffered as a result of a breach of duties assumed only by agreement." Id. (quoting Palco Linings, Inc. v. Pavex, Inc., 755 F. Supp. 1269, 1271 (M.D.Pa. 1990)). Compensation for losses suffered because of a breach of an agreement requires an analysis of which damages were within the contemplation of the parties when the agreement was made. Id. at 396 (quoting Auger v. Stouffer Corp., No. Civ.A. 93-2529, 1993 WL 364622, at *3 (E.D.Pa. Aug. 31, 1993)). This sort of analysis is "within the sole purview of contract law." Id. Rather, "[i]n order to show negligence, `there must be a showing of harm above and beyond disappointed expectations evolving solely from a prior agreement.'" Id. (quoting Sun Co. v. Badger Design and Constructors, Inc., 939 F. Supp. 365, 371 (E.D.Pa. 1996)). Accordingly, the economic loss doctrine permits recovery in negligence only for damage to property or injury to person. State Farm Mut. Auto. Ins. Co. v. HHS Assocs., Inc., No. Civ.A. 93-5943, 1995 WL 739703, at *3 (E.D.Pa. Dec. 1, 1995) (citing Lower Lake Dock Co. v. Messinger Bearing Corp., 395 Pa.Super. 456, 577 A.2d 631, 634 (1990)).

In the instant case, NDC alleges that it is asserting "losses it incurred because of Constar's negligence in preparing the pallets — labor, materials, and storage space NDC was forced to expend." (Def.'s Br. at 15; Counterclaims ¶¶ 75-84). Nowhere in its Answer or response to this Motion does NDC claim "damage" to any person or property. Rather, NDC admits that it seeks recovery for "losses" for unexpectedly expended services and materials. These are losses ...

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