United States District Court, W.D. Pennsylvania, Pittsburgh.
ADAMS POINTE I, L.P., ADAMS POINTE II, L.P., BAYBERRY NORTH ASSOCIATES L.P., AND; BETTERS REAL ESTATE HOLDINGS, L.P., INDIVIDUALLY AND ON BEHALF OF THOSE SIMILARLY SITUATED; JBCO, ADAMS POINTE III, L.P., ADAMS POINTE NORTH CONDOMINIUM ASSOCIATION, L.P., ADAMS POINTE MASTER ASSOCIATION, L.P., COULTER & GRAHAM, LLP., MICHAEL AND KATHLEEN BICHLER, JOHN EVANS, Plaintiffs,
v.
TRU-FLEX METAL HOSE CORP., TRU-FLEX, LLC, AND; AND PRO-FLEX LLC, Defendants,
REPORT AND RECOMMENDATION
CYNTHIA REED EDDY, UNITED STATES MAGISTRATE JUDGE
RECOMMENDATION
Presently
before the court for disposition are the following:
(1) A motion to dismiss and strike Third Party Plaintiffs
Tru-Flex Metal Hose Corp., Tru-Flex LLC and Pro-Flex
LLC's Third Party Complaints for failure to effect formal
service and failure to state a claim by Third Party
Defendants Ridge Management & Development Corp., Adams
Pointe South Village Owners Association, L.P., and Adams
Pointe Condominium Association (collectively “Adams
Pointe Management”) [ECF No. 138]; and
(2) A motion to dismiss and strike Third Party Plaintiffs
Tru-Flex Metal Hose Corp., Tru-Flex LLC, and Pro-Flex,
LLC's Third Party Complaints for failure to effect formal
service and failure to state a claim by Third Party
Defendants Ridge Development Corp. and Adams Pointe
Construction Corp. (collectively “Adams Pointe
Contractors”) [ECF No. 140].
The
motions are fully briefed and ripe for disposition.
See ECF Nos. 161, 162, 164, 165, 166, 182, 183. For
the reasons that follow, it is respectfully recommended as
follows:
Adams
Pointe Management's motion to dismiss the Third Party
Complaint [ECF No. 138] be GRANTED in part and DENIED in
part; and Adams Pointe Contractors' motion to dismiss the
Third Party Complaint [ECF No. 140] be GRANTED in part and
DENIED in part.
It is
specifically respectfully recommended that the motions be
granted with respect to Pro-Flex and Tru-Flex's claim for
indemnification and that claim be dismissed with prejudice
and that the motions be denied in all other respects.
REPORT
I.
Background
Because
the discussion of the underlying complaint is necessary for
resolution of the pending motions to dismiss the Third-Party
Complaints, the court will discuss the facts of the original
complaint before discussing the allegations set forth in the
Third-Party Complaints.
a.
Amended Complaint
Named
Plaintiffs are a group of putative class members who
initiated the present products liability suit against
Defendants Tru-Flex Metal Hose Corp., Tru-Flex, LLC
(collectively referred to as “Tru-Flex”) and
Pro-Flex, LLC (“Pro-Flex”) in connection with the
alleged defective design, manufacture and sale of Corrugated
Stainless Steel Tubing (“CSST”) for use in
residences and in other structures owned or otherwise
occupied by Named Plaintiffs. The court will only discuss
facts of the original complaint which are necessary to decide
the pending motions to dismiss the Third Party Complaints.
i.
Yellow-Jacketed CSST
CSST
consists of continuous, 300 series flexible stainless-steel
pipe encased in an insulative outer yellow jacket. Am. Compl.
[ECF No. 186] at ¶ 1. The yellow jacket material has the
thickness of approximately four sheets of paper. Id.
CSST is marketed as a superior option for natural gas
delivery to residences and more installer-friendly and safer
than traditional black iron pipe gas delivery systems.
Id. at ¶ 2. According to Named Plaintiffs,
there is internal industry recognition that yellow-jacketed
CSST products are prone to catastrophic failure when exposed
to electrical energy, and despite knowing this, Tru-Flex and
Pro-Flex continued to manufacture, market and distribute
their yellow-jacketed CSST product, Pro-Flex® CSST and
marketed their product through retail stores to “do-it
yourself” consumers and untrained workers. Id.
at ¶ 3. The thin walls of the yellow-jacketed CSST are
penetrable by the heat of an electrical event and causes the
piping to melt and the natural gas inside escapes which
causes a gas-fueled fire. Id. at ¶ 32. Named
Plaintiffs allege that even a nearby lightning strike that
does not directly strike a structure can cause the structure
to be electrically energized and this power surge can
potentially puncture a hole in the CSST and cause a fire.
Id. at ¶ 33. Electrical energy will travel
through any conductive path, such as gas piping, until it is
able to reach the ground. Id. While traditional
black iron pipes are able to withstand this energy, Named
Plaintiffs claim that yellow-jacketed CSST cannot.
Id. Named Plaintiffs allege that if a direct or
indirect lightning strike energizes CSST, the insulative
materials will not be able to carry the charge, which will
look to jump to a less resistant pathway by
“arcing.” Id. at ¶ 35. CSST has no
conductive value, meaning it does not distribute the electric
charge. Id. at ¶ 36. Instead, CSST focuses the
energy from an arc into the weakest points of the
yellow-jacketing which disintegrates those points first and
exposes the metal tubing to further energy, causing holes or
perforations in the gas lines. Id. CSST is exposed
to electric current frequently during electrical storms,
lightning strikes and often in ordinary household
circumstances where nearby sources of electricity,
i.e., electric wiring or appliances, cause a
“flashover” or an electric “arc.”
Id. at ¶ 37.
Previous
manufacturers of yellow-jacketed CSST ceased distribution of
this product even to qualified plumbing professionals, while
Tru-Flex and Pro-Flex increased their sales of these
allegedly defective products to consumers. Id. at
¶ 4. Named Plaintiffs allege that Tru-Flex and Pro-Flex
possess actual knowledge that the Pro-Flex® CSST does not
have sufficient thickness to protect against combustion after
a lightning strike or potentially even a household electrical
current, but continue to manufacture and distribute their
product to “do-it-yourself” installers and
professional installers in the Commonwealth of Pennsylvania
and nationwide. Id. at ¶ 5.
Pro-Flex®
CSST has been installed in real property owned by Named
Plaintiffs and is the alleged cause of property-damaging
fires, loss of value to the structures, costs for inspection
and repair, retrofitting costs, loss of sales through
disclosure and/or financing restrictions, and increased
insurance coverage costs. Id. at ¶ 6. Named
Plaintiffs seek redress for the harm caused by Tru-Flex and
Pro-Flex in the design, manufacture and ongoing marketing and
sales of the allegedly defective Pro-Flex® CSST.
Id.
ii.
History of Yellow-Jacketed Litigation and Mitigation by
Bonding and Grounding
Tru-Flex
Metal Hose Corp began manufacturing and distributing a
yellow-jacketed CSST product in the 1990's. Id.
at ¶ 27. In the early 2000's, Tru-Flex Metal Hose
Corp. changed the brand name of its yellow-jacketed CSST
product and began to distribute under the branded
Pro-Flex® mark, which was owned by Tru-Flex Metal Hose
Corp. Id. In 2004, a class action lawsuit was
brought against certain manufacturers of yellow-jacketed CSST
alleging that these manufacturers possessed knowledge that
yellow-jacketed CSST possessed insufficient thickness to
protect against combustion, and yet continued to manufacture,
market and distribute the same. Id. at ¶ 28 n.
4 (referring to Lovelis, et al. v. Titeflex, et al.,
Case No. Civ-2004-211, Clark County, Arkansas). The
Lovelis class further alleged that the manufacturers
failed to warn consumers about the inherent defect of
yellow-jacketed CSST that rendered it unreasonably dangerous
when used for its designed purpose. Id. The class
action ultimately settled and as part of the settlement, the
major manufacturers of CSST represented that bonding and
grounding the CSST system might mitigate the harm posed by
electrical imposition on the jacketing material. Id.
“Bonding” attempts to connect or tie all metal
points in the gas system together so that they conduct at the
same electrical potential level, theoretically preventing an
“arc” between areas of different electrical
potential. Id. at ¶ 40. “Grounding”
attempts to provide stray electrical current with a path to
the earth (ground). Id. at ¶ 41. This is
accomplished by attaching a larger wire (a ground wire or
other ground mechanism) to the tubing to “remove”
the electrical charge. Id. The charge transfers to
the ground wire or other “ground” to direct the
electric charge away from the tubing.” Id.
Named
Plaintiffs allege that without first validating whether the
risk of using yellow-jacketed CSST was sufficiently mitigated
by bonding and grounding future installations, and without
regard for any prior legacy installation, bonding and
grounding guidelines were included in industry-wide revised
Design and Installation Manuals provided to certified
installers (not the ultimate homeowner) for purposes of new
installations of yellow-jacketed CSST. Id. at ¶
42. Industry regulators allegedly questioned the propriety of
the bonding and grounding “safety fix” and noted
the absence of sufficient validation of the representations
of bonding and grounding as a safety solution. Id.
Pro-Flex and Tru-Flex both tout “bonding and
grounding” as a mitigation effort for their
Pro-Flex® CSST product in installation guides, but do not
provide any remedies or relief for legacy installations.
Id. at ¶¶ 44-49. Unlike other
manufacturers, Tru-Flex and Pro-Flex did not modify the
design of its CSST product to one with an arc-resistant
jacket and continue to use the insulative yellow-jacket and
rely solely on the instruction for future installations to
include bonding and grounding. Id. at ¶ 49.
According to Named Plaintiffs, “bonding and
grounding” fails to remedy the Pro-Flex® CSST in
existing structures and is not sufficient to remedy the
inherent danger of yellow-jacketed CSST because
yellow-jacketed CSST focuses electrical energy onto the
surface of the CSST. Id. at ¶¶ 51-52.
Further, Named Plaintiffs allege that even if Pro-Flex®
CSST is properly bonded, it still poses a risk of a
lightning-related fire and risks from ordinary household
current, and although Tru-Flex and Pro-Flex are aware of
these dangers and the availability of safer alternative
designs, they continue to market and distribute the
yellow-jacketed CSST. Id. at ¶ 53.
iii.
Third Parties and Mitigation Efforts
Industry
practices require yellow-jacketed CSST to be installed by a
qualified plumbing professional and in accordance with the
Manufacturer's Design and Installation
(“D&I”) Guide and all applicable plumbing
codes. Id. at ¶ 55. For installations that came
after the 2004 class action settlement “bonding and
grounding” mitigation, additional bonding of the CSST
must be performed by licensed electricians. Id.
According to Named Plaintiffs, the Defendants claim that
their product is safe enough when installed as directed and
take the position that third-parties assume the role of
ensuring the safety of the Pro-Flex® CSST product
regardless of the industrywide admission that the
yellow-jacketed product is inherently dangerous and
Defendants' responsibility ends upon the realized sale
because third-party entities have assumed the responsibility
to meet industry-accepted guidelines. Id. at ¶
56. Further, Named Plaintiffs point out that although
industry practices require CSST to be installed by a
qualified plumbing professional, and bonding to be performed
by licensed professionals, the Defendants disregard these
regulations by distributing and selling Pro-Flex® CSST to
“do-it-yourself” installers at hardware and home
supply stores where the only “training” provided
is an installation manual that is often sold separately.
Id. at ¶ 58. As Named Plaintiffs allege,
Defendants maintain that the down-stream seller, including
independent hardware stores, large “box store”
retailers, third-party catalogue sales and online outlets,
assume the responsibility for ensuring the purchaser of the
Pro-Flex® CSST product is qualified by appropriate
regulations and is further trained in the installation of the
Pro-Flex® CSST. Id. at ¶ 59. Named
Plaintiffs allege that while Defendants seek to mitigate the
dangers of Pro-Flex® CSST by employing third-parties, the
responsibility remains with Defendants. Id. at
¶ 60.
iv.
Damage to Named Plaintiffs[1]
The
Named Plaintiffs own residences affected by the allegedly
defective Pro-Flex® CSST and own multiple condominiums,
quad duplexes, carriage homes and townhomes in Pennsylvania
for personal possession, leasing and sale. Id. at
¶ 61.
On June
14, 2015, a nearby lightning activity caused a fire at 220
Adams Pointe Boulevard, Mars, Pennsylvania and caused
significant property damage to the properties. Id.
at ¶¶ 62, 64. After a fire investigation by third
parties, it was determined that the Pro-Flex® CSST
installed in the condominium unit failed as a result of
electrical insult, releasing natural gas into the unit, which
was ignited and caused significant property damage to the
contents and structure of the apartment unit with the CSST
and neighboring condominium units. Id. Prior to the
fire, the structure that had experienced the fire had been
inspected by local code officials and was reported to be in
compliance with the Construction Code Act and Uniform
Construction Code, and building code officials issued the
requisite certificate of occupancy for each of the structures
owned by Adams Pointe I, II and III. Id. at ¶
63. Named Plaintiffs allege that this signifies that
installation had occurred in accordance with applicable
standards and codes. Id. It also was difficult for
the owners of Adams Pointe I, II and III structures to sell
their interests in the property, as inspectors became aware
of the risks of yellow-jacketed CSST and included notes in
the home inspections of the material defect and danger posed
by the product. Id. at ¶ 65. This impacted the
sales and ultimate value of such residences. Id.
Named
Plaintiffs filed an Amended Complaint on December 4, 2017
identifying a proposed class of the following:
Any and all persons and/or entities who own real property in
the United States in which yellow-jacketed Pro-Flex® CSST
manufactured, designed, marketed, or distributed ...