United States District Court, M.D. Pennsylvania
E. Schwab United States Chief Magistrate Judge
Marsulex Environmental Technologies (“MET”), a
Delaware Corporation with its principal place of business in
Lebanon, Pennsylvania, brings this diversity action for
strict liability, breach of contract, breach of express and
implied warranties, and unjust enrichment against Defendant
Selip S.P.A. (“Selip”), an Italian corporation
with its principal place of business in Fontanellato (Parma),
Italy. MET, who is now proceeding via an amended
complaint, maintains that Selip deficiently designed and
manufactured piping that was supplied to one of MET's
customers in Poland. Before the Court is Selip's motion
to dismiss the entire amended complaint on the basis that a
provision in the parties' agreement precludes MET from
raising the claims therein. In the alternative, Selip moves
to dismiss Count I of the amended complaint, a strict
liability claim, on the basis that it is barred by
Pennsylvania's economic loss doctrine. For the reasons
set forth below, Selip's motion will be granted in part
and denied in part.
Background and Procedural History.
February 6, 2015, MET filed an original complaint (doc.
1) against Selip, alleging that Selip deficiently
designed and manufactured piping that was supplied to one of
MET's customers in Poland. In lieu of an answer, Selip
filed a motion (doc. 6) to dismiss MET's
original complaint under the doctrine of forum non
conveniens, insisting that this action could not proceed
fairly in the Middle District of Pennsylvania, and that
instead, it should be litigated in Poland. In the
alternative, Selip moved under Rule 12(b)(6) of the Federal
Rules of Civil Procedure to dismiss Count I, alleging strict
liability. Selip argued, among other things, that
Count I was barred by Pennsylvania's economic loss
March 18, 2016, the Court ruled on Selip's motion to
dismiss. See docs. 28, 29. The motion was
denied under the doctrine of forum non conveniens,
but granted under Rule 12(b)(6) to dismiss Count I pursuant
to Pennsylvania's economic loss doctrine. Having so
ruled, the Court instructed MET to file an amended complaint.
MET filed that amended complaint (doc. 33) on April
15, 2016, raising (as it did before) claims of strict
liability, breach of contract, breach of express warranty,
breach of implied warranty, and unjust enrichment due to
Selip's allegedly deficient design and manufacturing of
the piping that was supplied to MET's customer in Poland.
the filing of the amended complaint, Selip has filed its
second motion (doc. 42) to dismiss. This time, Selip
moves for dismissal of the entire amended complaint on the
basis of a provision in the parties' Contract. In the
alternative, however, Selip moves for dismissal of Count I in
the amended complaint, a strict liability claim. Selip, who
also moved for dismissal of Count I in its first motion to
dismiss, resurrects its argument here and maintains that
MET's strict liability claim is barred by
Pennsylvania's economic loss doctrine.
The Amended Complaint.
order to once again evaluate the adequacy of MET's
pleadings, we briefly state the facts, as set forth in the
amended complaint, as follows:
about January 22, 2010, MET, a company which provides air
quality control systems to minimize the emission of air
pollutants, entered into an engineering and procurement
agreement with Zaklady Azotowe “Pulway” S.A.
(hereinafter, “ZAP”), a chemical company in
Poland, which specializes in the manufacturing of fertilizer.
Doc. 33 at ¶¶ 8, 9. This agreement, in
part, required MET to oversee the design and purchase of
goods for the construction of a Flue Gas Desulfurization Unit
(“FGD Unit” or “Unit”) at ZAP's
chemical plant in Poland. Id. at ¶ 10.
According to MET, the environment inside an FGD Unit is
highly corrosive, and based on past experience, MET
determined that the FGD Unit required “External
Fiberglass Reinforced Plastic Piping” (“FRP
piping” or “piping”). Id. at
¶¶ 1, 11.
about June 21, 2010, MET entered into a Contract with Selip,
under which Selip agreed to design, manufacture, and supply
FRP piping for the construction of the FGD Unit at ZAP's
chemical plant. Id. at ¶ 12. This Contract
required Selip to, among other things, fabricate the FRP
piping in accordance with Selip's recommended procedures
and all approved drawings. Id. at ¶ 14. This
Contract further required the inner and outer surfaces of the
FRP piping to be “free of cracks.” Id.
at ¶ 15 (quoting doc. 33-1 at 9, ¶ 4.4).
In addition, Selip warranted that the contracted-for
equipment would be “properly and professionally
constructed;” it would “meet the technical
requirements of the Purchase Order[, ] including the
standards and regulations[, ] as well as the best engineering
practices;” and it would be “new and unused, of
the specified material, free of defects, and fit for the
application specified.” Id. at ¶ 16
(quoting doc. 33-2 at 3, ¶ 5). Selip further
warranted that the FRP piping would be “of merchantable
quality, free from all defects in design, workmanship and
materials, and . . . fit for the particular purposes for
which they [were] purchased, ” and finally,
“provided in strict accordance with the specification,
samples, drawings, designs or other requirements (including
performance specification) approved or adopted by
[MET].” Id. at ¶ 17 (quoting doc.
33-3 at 4, ¶ 10 (b)).
about February 3, 2011, Selip delivered the FRP piping to
ZAP's plant, and in October of 2012, the plant began
operating. Id. at ¶¶ 18, 19. Only a few
months later in January of 2013, Selip was notified that
there were cracks in the FRP piping. Id. at ¶
20. Selip, after examining the FRP piping at ZAP's plant,
acknowledged the cracks, but deemed the cracks
“superficial” and filled them with resin.
Id. According to MET, these cracks were an early
warning sign that Selip's FRP piping was defective, and
as was later revealed, Selip's hasty repair failed to
correct the underlying problems. Id.
about September 16, 2013, Selip was notified that new cracks
were forming in the FRP piping. Id. at ¶ 21.
According to MET, the continued cracking demonstrated that
the problems with the piping were significant, and further,
that the piping was continuing to deteriorate. Id.
Selip, on or about April 8, 2014, went to ZAP's plant,
examined the cracking in the FRP piping, acknowledged-once
again-that there were cracks in the piping, and avowed that
it would provide support and assistance to repair the cracks.
Id. at ¶ 22. According to the amended
complaint, Selip, contrary to the parties'
“agreement, ” specified that all costs for its
assistance to repair its defective piping would be charged to
either MET or ZAP. Id.
about May 31, 2014, there was a serious malfunction on the
FGD Unit caused by the failure of the FRP Piping.
Id. at ¶ 23. ZAP, on June 2, 2014, informed MET
of this failure, and MET, on the same day, informed Selip of
the same. Id. The following day, MET sent Selip
photographs of the failed FRP piping and resulting damage at
ZAP's plant. Id. at ¶ 24. According to MET,
the photographs illustrate that the FRP piping essentially
exploded and tore apart, causing structural damage to
ZAP's pumping station facility, which housed the FGD Unit
and key components of the FGD Unit other than the FRP piping
itself, such as the agitator, expansion joints, and flanges.
Id. Thereafter, MET informed Selip of ZAP's
understanding that the failure was caused by a deficiency in
Selip's design and manufacturing of the FRP piping, and
MET requested that Selip dispatch someone to ZAP's plant
in order to examine the piping and make a determination as to
why it failed. Id. at ¶ 25. According to MET,
however, Selip refused to send someone. Id. at
result of the failed FRP piping, ZAP's plant was
completely shut down for approximately three months.
Id. at ¶ 27. In addition, MET was required to
repair the FGD Unit in order to comply with guarantees and
performance obligations in its agreements with ZAP.
Id. at ¶ 28. More specifically, MET was under
warranty for all key equipment used in the FGD Unit.
Id. And, in order to repair the Unit, MET was forced
to replace, at its own expense, the failed FRP piping with a
product from another manufacturer. Id. at ¶ 29.
MET was also forced to replace other various key components
of the FGD Unit, also at its own expense, including the
agitator, expansion joints, and flanges. Id.
addition, MET hired a third-party expert (the
“Expert”) to investigate Selip's failed FRP
piping. Id. at ¶ 30. The Expert evaluated
cross-sections from samples of the piping, as well as the
piping's construction via “visual
inspection and a modified loss on ignition test-also referred
to as a burn test.” Id. at ¶ 31. The
Expert concluded that the FRP piping supplied by Selip was
poorly constructed because Selip used low strength
reinforcement and non-structural components in the flange
area of the piping. Id. at ¶ 32. The Expert
further concluded that the flanges in the piping did not meet
Selip's design and fabrication requirements. Id.
In particular, the Expert's tests revealed that the woven
roving layers that were required by Selip's working
procedures were not used in the flange section of the FRP
piping, thus resulting in weak piping, which could not handle
the stress that it was intended to handle. Id. at
¶ 33. The Expert's tests also revealed that the FRP
piping included “flange areas that had joints and were
not made essentially from one piece as depicted in
Selip's drawings and working procedures.”
Id. at ¶ 34. “Selip's use of flanges
with joints reduced the overall flange strength because a
joint crevice was located directly behind the point of high
stress in the flange hub.” Id. Finally, the
testing showed instances of poor secondary bonding.
Id. at ¶ 35.
about September 24, 2014, MET informed Selip that there were
manufacturing defects in the FRP piping, and further, that
the piping was not manufactured in accordance with the
parties' contract, Selip's working procedures, or
Selip's design. Id. at ¶ 36. Moreover,
Selip failed to manufacture sections of the piping's
flange areas in conformity with the standard industry
practice because “Selip prepared the piping's
flanges with a non-structural short segment of pipe placed
behind the flange extending the length of the elbow rather
than laying-up the flange directly onto the end of the
elbow.” Id. at ¶ 37. As a result,
Selip's FRP piping was not fit for its intended use.
result, MET requested payment from Selip in the amount of
$557, 873.53 for the following: (1) replacement of (a) the
defective FRP piping, (b) the agitator in the FGD Unit, and
(c) the flanges in the FGD Unit; (2) repair of other
components of the FGD Unit; and (3) other services that it
was forced to render as a result of Selip's defective FRP
piping. Id. at ¶ 38. According to the amended
complaint, Selip rejected this request on or about October
29, 2014. Id. at ¶ 39.
accordance with Rule 12(b)(6) of the Federal Rules of Civil
Procedure, the court may dismiss a complaint for
“failure to state a claim upon which relief can be
granted.” When reviewing a motion to dismiss,
“[w]e must accept all factual allegations in the
complaint as true, construe the complaint in the light
favorable to the plaintiff, and ultimately determine whether
plaintiff may be entitled to relief under any reasonable
reading of the complaint.” Mayer v. Belichick,
605 F.3d 223, 229 (3d Cir. 2010). In making that
determination, we “consider only the complaint,
exhibits attached to the complaint, matters of public record,
as well as undisputedly authentic documents if the
[plaintiff's] claims are based upon these
documents.” Id. at 230.
Rule 12(b)(6) motion tests the sufficiency of the complaint
against the pleading requirements of Rule 8(a).”
I.H. ex rel. D.S. v. Cumberland Valley Sch. Dist.,
842 F.Supp.2d 762, 769-70 (M.D. Pa. 2012). “Under
Federal Rule of Civil Procedure 8(a)(2), 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, 677-78 (2009). The
statement required by Rule 8(a)(2) must give the defendant
fair notice of what the plaintiff's claim is and of the
grounds upon which it rests. Erickson v. Pardus, 551
U.S. 89, 93 (2007). Detailed factual allegations are not
required, but more is required than labels, conclusions, and
a formulaic recitation of the elements of a cause of action.
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007). “In other words, a complaint must do
more than allege the plaintiff's entitlement to
relief.” Fowler v. UPMC Shadyside, 578 F.3d
203, 211 (3d Cir. 2009). “A complaint has to
“show” such an entitlement with its facts.”
considering whether a complaint fails to state a claim upon
which relief can be granted, the court must accept as true
all well-pleaded factual allegations in the complaint, and
all reasonable inferences that can be drawn from the
complaint must be construed in the light most favorable to
the plaintiff. Jordan v. Fox Rothschild, O'Brien
& Frankel, Inc., 20 F.3d 1250, 1261 (3d Cir. 1994).
But a court “need not credit a complaint's bald
assertions or legal conclusions when deciding a motion to
dismiss.” Morse v. Lower Merion Sch. Dist.,
132 F.3d 902, 906 (3d Cir. 1997). Additionally, a court need
not “assume that a . . . plaintiff can prove facts that
the . . . plaintiff has not alleged.” Associated
Gen. Contractors of Cal. v. California State Council of
Carpenters, 459 U.S. 519, 526 (1983).
Twombly and Iqbal, a well-pleaded complaint
must contain more than mere legal labels and conclusions.
Rather, it must recite factual allegations sufficient to
raise the plaintiff's claimed right to relief beyond the
level of mere speculation. In practice, consideration of the
legal sufficiency of a complaint entails a three-step
First, the court must ‘tak[e] note of the elements a
plaintiff must plead to state a claim.' Second, the court
should identify allegations that, ‘because they are no
more than conclusions, are not entitled to the assumption of
truth.' Finally, ‘where there are well-pleaded
factual allegations, a court should assume their veracity and
then determine whether they plausibly give rise to an
entitlement for relief.'
Santiago v. Warminster Tp., 629 F.3d 121, 130 (3d
Cir. 2010) (quoting Iqbal, 556 U.S. at 675 &