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Fairmont Supply Co. and Cnx Gas Company, LLC v. Cressman Tubular Products Corp.

March 10, 2011

FAIRMONT SUPPLY CO. AND CNX GAS COMPANY, LLC,
PLAINTIFFS,
v.
CRESSMAN TUBULAR PRODUCTS CORP., THYSSENKRUPP MATERIALS, N.A., THYSSENKRUPP MANNEX GMBH, AND ISMT LTD,
DEFENDANTS.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

ELECTRONICALLY FILED

MEMORANDUM ORDER

This is a breach of contract and breach of warranty lawsuit. Defendants manufacture and/or supply steel pipe. Plaintiff, Fairmont Supply Co. ("Plaintiff Fairmont"), purchased pipe from Defendant, Cressman Tubular Products Corporation ("Defendant Cressman"), and then supplied it to Plaintiff, CNX Gas Company, LLC ("Plaintiff CNX").*fn1 After Plaintiff CNX (the end user of the steel pipe in question) incorporated the pipe into its gas well production pipeline, a hole in the pipe was discovered at a depth which rendered the well shaft completely inoperable. Plaintiffs are seeking compensatory damages.

Currently before the Court are two separate Motions to Dismiss, one filed by Defendant Cressman and the other by Defendant ThyssenKrupp Materials, N.A. ("Defendant ThyssenKrupp-Materials") pursuant to Fed.R.Civ.P. 12(b)(6). See doc. nos. 13 and 16, respectively. Plaintiffs filed a Brief in Opposition to each Motion. See doc. nos. 19 and 20,respectively. Each of the Defendants filed a Reply Brief in Support of their respective Motions to Dismiss. See doc nos. 23 and 24, respectively.

After careful consideration of all of the submissions, and based upon the analysis and reasoning that follows, Defendants‟ motions will be denied in part and granted in part.

I. Background

The following facts are accepted as true for solely for the purposes of this Motion to Dismiss.

Defendant Cressman, Defendant ThyssenKrupp-Materials, and Defendant ThyssenKrupp Mannex GmbH ("Defendant ThyssenKrupp-Mannex) repeatedly solicited Plaintiffs Fairmont and CNX to purchase to purchase steel tubing manufactured by Defendant ISMT, Ltd. ("Defendant ISMT"), for use in its Marcellus shale drilling operations. Doc. no. 6, ¶¶ 15, 34. Defendant ISMT (a company organized the laws of the Republic of India) hired Defendant ThyssenKrupp-Mannex to market ISMT‟s pipe to customers in the United States. Id. at ¶ 20. Defendant ThyssenKrupp-Mannex acted as Defendant ISMT‟s agent, and Defendant ThyssenKrupp-Materials acted as an agent or sub-agent of Defendant ThyssenKrupp-Mannex and Defendant ISMT, and Defendant Cressman acted as an agent or sub-agent of Defendant ThyssenKrupp-Mannex, Defendant ThyssenKrupp-Materials, and Defendant ISMT for selling steel tubing to customers in Pennsylvania. Id. at ¶ 29-31.

On June 26, 2009, representatives from Defendant Cressman (Art Cressman, Jr.), Defendant ThyssenKrupp-Materials (Christiane Stuart), and Defendant ThyssenKrupp-Mannex (Carsten Konig), attended a meeting at Plaintiff Fairmont‟s offices. Id. at ¶¶ 16-18, 21. Mr. Konig is the head of the Oil and Gas division of ThyssenKrupp-Mannex. Id. at ¶19. Mr. Stuart works for ThyssenKrupp-Materials Steel Services Trading Division which acts as the importer and takes title to goods manufactured abroad. Id. at ¶ 22.

During that meeting, it was discussed how Defendant ISMT‟s steel tubes (hereinafter, "the subject tubes" or "the tubes at issue") could "meet the needs of Fairmont and its customers in Pennsylvania, including CNX . . . ." Id. at ¶ 24. The Amended Complaint also indicates that Defendant Cressman, in an email dated July 12, 2009 to Plaintiff Fairmont, stated that the tubes in question would provide "success to Fairmont, "its Parent and to your other regional clients.‟" Id. at ¶ 26(h). The Amended Complaint also alleges that the "Parent" referenced in this email referred to CONSOL Energy, Inc. "and its affiliates, including CNX . . . ." Id. at ¶ 27.

As result of the Defendants‟ collective marketing events, Plaintiff Fairmont agreed to purchase steel tubing manufactured by ISMT. Id. at ¶ 35. Some of the steel tubing was delivered to Plaintiff CNX for installation in well NV-17CCV. Id. at ¶ 45.

Installation of the steel tubes in well NV-17CCV was concluded on July 4, 2010. Id. at ¶ 46. On July 24, 2010, a pressure test of the well shaft revealed a hole in the steel tubing at issue nearly 5200 feet down the vertical well shaft. Id. at ¶ 47. Due to its depth this hole could not be reliably repaired and rendered the well shaft inoperable. Id. at ¶¶ 48-49. The segment of tubing at issue cannot be removed from the well shaft because the pipe is cement inside other casings which are cemented in the ground. Id. at ¶ 50.

Plaintiff Fairmont engaged a vendor who tested and verified that the tubing with the hole was, in fact, the pipe that Defendant Cressman sold to Plaintiff Fairmont and that Plaintiff Fairmont, in turn, sold to Plaintiff CNX. Id. at ¶ 52. After communicating the pipe failure and test results to Defendant Cressman, Defendant Cressman was sent, at its request, that all remaining steel tubing supplied be delivered to a vendor for testing. Id. at ¶ 55. In September of 2010, after testing 1,577 pieces, at least 277 did not comply with the thickness specifications and could not be repaired. Id. at ¶ 57.

II. Standard of Review

In considering a Rule 12(b)(6) motion, federal courts require notice pleading, as opposed to the heightened standard of fact pleading. Federal Rule of Civil Procedure 8(a)(2) requires only " "a short and plain statement of the claim showing that the pleader is entitled to relief,‟ in order to "give the defendant fair notice of what the . . . claim is and the grounds on which it rests.‟ " Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

To survive a motion to dismiss, plaintiff must allege sufficient facts that, if accepted as true, state "a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Twombly, 550 at 570). A claim has facial plausibility when a plaintiff pleads facts that allow the court to draw the reasonable inference that the defendant may be liable for the misconduct alleged. Id. at 1949. However, the court is ""not bound to accept as true a legal conclusion couched as a factual allegation.‟ " Iqbal, 129 S.Ct. at 1950 (quoting Twombly, 550 U.S. at 555). In deciding a motion to dismiss, a court must determine whether the complaint "pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." PA Prison Soc. v. Cortes, 622 F.3d 215, 233 (3d Cir. 2010), citing Iqbal, 129 S.Ct. at 1949. "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id.; see also Fowler v. UPMC Shadyside, 578 F.3d 203, 210-211 (3d Cir. 2009).

As explained succinctly by the United States Courts of Appeals for the Third Circuit:

Pursuant to Ashcroft v. Iqbal, [citation omitted], district courts must conduct a two-part analysis when presented with a motion to dismiss. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009). "First, the factual and legal elements of a claim should be separated." Id. "The District Court must accept all of the complaint‟s well-pleaded facts as true, but may disregard any legal conclusions." Id. at 210-11. "Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a "plausible claim for relief.‟ " Id. at 211 (quoting Iqbal, 129 S.Ct. at 1950). Edwards v. A.H. Cornell and Son, Inc., 610 F.3d 217, 219 (3d Cir. 2010).

When determining whether a plaintiff has met the second part of the analysis and presented facts sufficient to show a "plausible claim for relief," the Court must consider the specific nature of the claim presented and the facts pled to substantiate that claim. For example, in Fowler, a case predicated upon a violation of the Rehabilitation Act, the Court of Appeals determined that "[t]he complaint pleads how, when, and where [the defendant] allegedly discriminated against Fowler." 578 F.3d at 212. The Court, while noting that the Complaint was "not as rich with detail as some might prefer," it the "how, when and where" provided by the plaintiff sufficient grounds to establish plausibility. Id. at 211-212.

The Court of Appeals for the Third Circuit in Guirguis v. Movers Specialty Services, Inc., 346 Fed.Appx. 774, 776 (3d Cir. 2009), a civil rights and Title VII case, affirmed a decision to dismiss a plaintiff‟s complaint because the plaintiff failed to plead facts explaining why he ...


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