United States District Court, W.D. Pennsylvania
MAUREEN P. KELLY, CHIEF UNITED STATES MAGISTRATE JUDGE
Painter Tool, Inc. (“Plaintiff”) filed this civil
lawsuit seeking to recover damages it alleges to have
sustained from its use of steel manufactured by Defendant
Dunkirk Specialty Steel, LLC (“Dunkirk”) and
supplied by Defendant Earle M. Jorgensen Company
(“EMJ”). Before the Court are two Motions to
Dismiss: one filed by Dunkirk, ECF No. 19, and one filed by
EMJ, ECF No. 22. For the reasons that follow, Dunkirk's
Motion to Dismiss will be granted in part and denied in part
and EMJ's Motion to Dismiss will be granted in part and
denied in part.
FACTUAL AND PROCEDURAL BACKGROUND
originally filed its Complaint in the Court of Common Pleas
of Westmoreland County. The case was removed to this Court on
February 13, 2017. ECF No. 1. Dunkirk filed a Motion to
Dismiss on February 18, 2017. ECF No. 4. This Court
subsequently granted Plaintiff's Motion for Leave to File
an Amended Complaint and denied Dunkirk's Motion to
Dismiss as moot. ECF Nos. 13-14. On April 4, 2017, Plaintiff
filed the operative Complaint.ECF No. 17.
Complaint, Plaintiff makes the following allegations. On
August 8, 2013, Plaintiff was awarded a contract from the
United States Navy for the construction of 400 steel valves
(“the Navy contract”). Id. ¶ 6.
Plaintiff was to be paid $2, 414, 000 under the Navy
contract. Id. ¶ 7. The Navy contract specified
that the stems for the valves had to be made to certain
specifications, notably “SAE-AMS-QQ-S-763, Class 410,
Condition T.” Id. ¶ 8. Plaintiff sent a
purchase order to EMJ for “507 feet (min.) x
.750” Dia. RD, (43 Bars 12' R/L), 410 SS, Heat
Treated to Condition ‘T' per QQ-S-763B. 776
lbs” for a total price of $2, 366.80 (“the
Purchase Order”). Id. ¶ 9. EMJ accepted
the Purchase Order and, on September 18, 2013, EMJ shipped
steel (“the Materials”) to Plaintiff, along with
a Dunkirk's Material Certification (“the First
Material Certification”) of the Materials. Id.
¶¶ 11-12. The First Material Certification met the
specifications of both the Purchase Order and the Navy
contract and in reliance thereupon, Plaintiff paid EMJ in
full and began manufacturing the valves. Id.
about February and March of 2014, Plaintiff completed
hardness testing of the finished valve stems and assembled
the first 50 valves. Id. ¶ 17. On March 13,
2014, Plaintiff submitted its certifications for those 50
valves for review and approval by the Navy. Id.
Plaintiff then completed the remaining valves for the Navy
receipt of the certifications for the first 50 valves, the
Navy raised concerns pertaining to the steel from which the
valve stems were made. Id. ¶ 18. The Navy
requested that Plaintiff provide it with a revised material
certification from Dunkirk. Id. Dunkirk issued
“the Second Material Certification” on March 26,
2014, which was substantially identical to the First Material
Certification. Id. ¶ 19.
April 29, 2014, Dunkirk issued “the Third Material
Certification” and “the Fourth Material
Certification.” Id. ¶ 20. These
certifications represented that the Materials had a hardness
level of 287 BHN/30 HRC, i.e., that the steel was
harder than originally represented. Id. ¶ 21.
In response to the change in representation of the hardness
level of the Materials, the Navy requested that Plaintiff
provide it with a complete history of the heat treatment
performed on the Materials by Dunkirk. Id. ¶
22. On November 10, 2014, Dunkirk issued “the Fifth
Material Certification” in which Dunkirk represented
that the Materials had been heat treated to Condition H
rather that to Condition T as requested in the Purchase
Order. Id. ¶ 24.
Navy conducted an audit of Plaintiff and its facility in
December of 2014. On December 19, 2014, in response to the
audit, Plaintiff sent two samples of the finished stems,
manufactured with the Materials, to Westmoreland Mechanical
Testing & Research, Inc. (“WMT&R”) for an
independent hardness examination. Id. ¶ 26.
WMT&R issued its report that same day, finding
unacceptable hardness levels for the specifications of the
Purchase Order. Id. ¶ 27.
January 6, 2015, the Navy issued a report as to its audit,
finding that Dunkirk failed to provide steel that met the
specifications of the Navy contract and the Purchase Order
because the Materials had been heat treated to achieve Class
410, Condition H, not Class 410, Condition T. Id.
¶ 29. The report further concluded that the failure to
meet these specifications had a direct impact on the ultimate
the improper hardness level of the steel, the Navy rejected
the stems/valves produced by Plaintiff on multiple occasions.
Id. ¶ 31. Plaintiff incurred significant
additional expenses in correcting the hardness level of the
steel. Id. ¶ 32. In replacing the valves so
that the Navy would accept them, Plaintiff incurred costs of
over $275, 000. Id. ¶ 33.
as a result of the audit and the defective steel,
Plaintiff's business reputation and goodwill were damaged
and it lost numerous Navy contracts that it would have
received. Id. ¶ 34. In total, Plaintiff has
suffered at least $1, 200, 000 in damages for lost profits,
loss of business operations, loss of reputation and goodwill,
loss of future contracts and other incidental and
consequential damages. Id. ¶ 35.
Complaint, Plaintiff alleges ten counts: (1) Count I against
EMJ for breach of contract; (2) Count II against EMJ for
breach of express warranty; (3) Count III against EMJ for
breach of implied warranty of merchantability; (4) Count IV
against EMJ for breach of implied warranty of fitness for a
particular purpose; (5) Count V against EMJ for unjust
enrichment; (6) Count VI against Dunkirk for promissory
estoppel; (7) Count VII against Dunkirk for breach of express
warranty; (8) Count VIII against Dunkirk for breach of
implied warranty of merchantability; (9) Count IX against
Dunkirk for breach of implied warranty of fitness for a
particular purpose; and (10) Count X against Dunkirk for
negligent misrepresentation. Id. at 7-15.
April 18, 2017, Dunkirk filed its instant Motion to Dismiss
and Brief in Support. ECF Nos. 19-20. On May 15, 2017,
Plaintiff filed its Brief in Opposition to Dunkirk's
Motion to Dismiss. ECF No. 25. On May 25, 2017, Dunkirk filed
a Reply Brief. ECF No 30.
April 25, 2017, EMJ filed its instant Motion to Dismiss and
Brief in Support. ECF Nos. 22-23. On May 15, 2017, Plaintiff
filed its Brief in Opposition to EMJ's Motion to Dismiss.
ECF No. 26. On May 31, 2017, EMJ filed a Reply Brief. ECF No.
Motions to Dismiss are now ripe for consideration.
STANDARD OF REVIEW
United States Supreme Court explained in Bell Atlantic
Corp. v. Twombly, 550 U.S. 544 (2007), a complaint may
properly be dismissed pursuant to Federal Rule of Civil
Procedure 12(b)(6) if it does not allege “enough facts
to state a claim to relief that is plausible on its
face.” Id. at 570. In assessing the merits of
a claim subject to a motion to dismiss, a court must accept
all alleged facts as true and draw all inferences gleaned
therefrom in the light most favorable to the non-moving
party. Phillips v. County of Allegheny, 515 F.3d
224, 228 (3d Cir. 2008) (citing Worldcom, Inc. v.
Graphnet, Inc., 343 F.3d 651, 653 (3d Cir. 2003)). A
pleading party need not establish the elements of a prima
facie case at this stage; the party must only “put
forth allegations that ‘raise a reasonable expectation
that discovery will reveal evidence of the necessary
element[s].'” Fowler v. UPMC Shadyside,
578 F.3d 203, 213 (3d Cir. 2009) (quoting Graff v.
Subbiah Cardiology Associates, Ltd., 2008 WL 2312671
(W.D. Pa. June 4, 2008)).
review, the Court may consider exhibits attached to the
complaint, matters of public record and undisputedly
authentic documents upon which the plaintiff's claims are
based. Kriley v. IBM Corp., Civ. A. No. 16-1860,
2017 U.S. Dist. LEXIS 70978, at *5 (W.D. Pa. May 10,
Motion to Dismiss filed by EMJ
Count I: Breach of contract
Count I, Plaintiff alleges that EMJ breached its obligations
under the terms of the Purchase Order by failing to ship
conforming goods without any material defects. ECF No. 17
¶ 40. Although Plaintiff's allegations under Count I
do not identify the nature of the non-conformance or the
specific material defect, in the preceding
“Facts” section of the Complaint, and in its
Brief in Opposition to EMJ's Motion to Dismiss, Plaintiff
makes clear that the basis of Count I is that EMJ shipped
steel bars that that been heat-treated to condition
“H” and not condition “T.” ECF No. 17
at 1-7; ECF No. 26 at 9.
asserts that it did not breach the Purchase Order in this
manner because steel that is heat-treated to Condition
“H” also meets the requirements of Condition
“T.” ECF No. 23 at 8. At this stage of the case,
the Court will not engage in fact-finding as to the meanings
of steel specifications. Plaintiff's allegations of a
material difference between the specification of the steel
ordered and the Materials delivered are sufficient to
establish a plausible claim for breach of contract.
EMJ's Motion to Dismiss Count I will be denied.
Count II: Breach of express warranty
did in seeking to dismiss Count I, EMJ seeks to dismiss Count
II on the basis that the steel EMJ sold to Plaintiff met or
exceeded all of the express requirements of the Purchase
Order. ECF No. 23 at 9-10. As the Court found in denying
EMJ's Motion to Dismiss Count I, the Court finds that the
determination as to whether the express requirements were met
or exceeded by a different heat-treated condition is a
question of fact not appropriate for resolution at this
EMJ's Motion to Dismiss Count II will be denied.
Count III: Breach of implied warranty of merchantability
Count III, Plaintiff alleges that EMJ breached its implied
warranty of merchantability in that the Materials “did
not pass without objection in the trade under the description
in the Purchase Order.” ECF No. 17 ¶ 51.
As the United States Court of Appeals for the Third Circuit
Under Pennsylvania law, “a warranty that the goods
shall be merchantable is implied in a contract for their sale
if the seller is a merchant with respect to goods of that
kind.” 13 Pa. Cons. Stat. Ann. § 2314(a). The
Pennsylvania Supreme Court has explained that [t]he concept
of "merchantability" does not require that the
goods be the best quality, or the best obtainable, but it
does require that they have an inherent soundness which makes
them suitable for the purpose for which they are designed,
that they be free from significant defects, that they perform
in the way that goods of ...