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Constructora Mi Casita S. de R.L. de C.V. v. NIBCO Inc.

United States District Court, N.D. Indiana, South Bend Division

October 9, 2017

CONSTRUCTORA MI CASITA S DE RL DE CV, Plaintiff,
v.
NIBCO INC., Defendant,

          OPINION AND ORDER

          PHILIP P. SIMON, JUDGE UNITED STATES DISTRICT COURT

         Plaintiff Mi Casita is a Mexican architectural, design, and construction company in Baja California that has developed a large condominium project in that area. Mi Casita used plumbing products in the construction project that were manufactured by defendant NIBCO. Mi Casita claims that the NIBCO products were defective and caused water leaks throughout the property that led to widespread property damage and required complete replacement of the plumbing in many of the condominiums at great cost to Mi Casita. Mi Casita seeks compensatory and consequential damages for the alleged damage caused by NIBCO's products.

         When the pipes began to leak and cause damage to the condominium units, the owners of those units were (unsurprisingly) not particularly pleased with Mi Casita. Mi Casita has attempted to remedy the situation and that has led to a twist in this case. Nearly all of the individual condominium owners and the condominium association have assigned their claims to Mi Casita. So the present lawsuit purports to bring claims both directly by Mi Casita and by Mi Casita as assignee of the condominium owners and association's claims. But there's a problem. It is far from clear from reviewing the second amended complaint which claims are based on damages suffered by Mi Casita directly versus claims assigned to it by the individual condominium owners and association.

         NIBCO seeks dismissal of all claims against it for failure to state a claim. As detailed below, because I find that Mi Casita sufficiently pleaded some but not all of its claims in the second amended complaint, NIBCO's motion is granted in part and denied in part.

         BACKGROUND

         For purposes of a motion to dismiss, I will take all facts as alleged in the second amended complaint as true. Plaintiff Constructora Mi Casita S. de R.L. de C.V. is a Mexican architectural, design, and construction company that constructs condominium complexes in Baja California, Mexico. [DE 38 ¶¶1, 58.] Defendant NIBCO Inc. manufactures, warrants, advertises, and sells plumbing products and is incorporated in Elkhart, Indiana. [Id. at ¶¶2, 18-19.] From 2006 to 2009, Mi Casita purchased and installed NIBCO's cross-linked polyethylene plumbing tubes (“PEX Tubing”), brass fittings (“PEX Fittings”), and stainless steel clamps (“PEX Clamps”). [DE 38 at ¶¶7, 60-61.] For the sake of convenience, I will refer to these items collectively as the “PEX Products.” Soon after installation, the tubing began to deteriorate and caused leaks and property damage throughout the condominium development. [Id. at ¶7.] Mi Casita alleges that the PEX Products suffer from a design and/or manufacturing defect that causes premature failure. [DE 38 at ¶¶28-29.] This has led to water seeping out of the pipes causing severe property damage to the condominium units and the common areas. [Id. at ¶28.] Mi Casita alleges that this was caused by insufficient stabilization or improper cross-linking of the material used by NIBCO. [Id. at ¶30.] Additionally, the PEX Fittings are prone to developing holes that allow water to seep through the walls of the fitting. [Id. at ¶44.] This may cause low water pressure or, if the fitting cracks or breaks, significant water damage. [Id.] The PEX Clamps slowly fracture from “chloride-induced stress corrosion cracking.” [Id. at ¶47.] Stress corrosion cracking is directly related to defects in engineering design and manufacturing. [Id. at ¶49.] Mi Casita further alleges that NIBCO knew about the problem before it sold the products to Mi Casita because other consumers have experienced similar water damage as a result of NIBCO's defective products. [Id. at ¶30.]

         Mi Casita selected NIBCO's products based on its representations of high quality and “superior characteristics.” [Id. at ¶¶22-26.] For instance, NIBCO's catalog claims that its process “delivers the highest quality PEX tubing available today.” [Id. at ¶25.] NIBCO also warranted that its PEX Tubing would be free from defects for at least 10 years. [Id. at ¶¶26, 79-82.] If the buyer installed the tubing with NIBCO's other PEX products, NIBCO warranted the tubing for 25 years. [Id. at ¶¶26, 34, 39.] The express warranty states:

NIBCO Inc. warrants that when NIBCO® PEX tube is used with NICBO® PEX fittings, and NIBCO® valves and installation accessories, they will, under normal conditions, use and service in potable water and radiant heat systems, be free from defects in materials and workmanship for a period of twenty-five (25) years from the date of purchase when installed by a licensed professional contractor.

[DE 38 at ¶¶31, 41.] Mi Casita alleges that NIBCO has refused to replace its products thus breaching this warranty. [Id. at ¶¶34, 114.]

         As noted above, the owners of the individual condominiums got a bit cranky when water started seeping into their units and they made demands of Mi Casita to fix the leaks and property damage. [DE 38 at ¶8.] In response, Mi Casita has fixed, or intends to fix, the damage and replaced all of NIBCO's defective tubing products at great cost. [Id. at ¶¶65-66.] Mi Casita also has been forced to incur additional expenses related to relocation of the residents during repairs and loss of rental income. [Id. at ¶67.] Because of the likelihood of future claims and lawsuits, Mi Casita obtained assignments of claims from nearly all of the individual condominium owners and from the condominium association. [Id. at ¶¶42, 70.] Mi Casita alleges that standing in the shoes of the condominium owners through the assignment allows it to recover consequential and incidental damages otherwise barred by NIBCO's express warranty. [Id. at ¶90.]

         Mi Casita tells me that on or around January 7, 2015, it made demands on NIBCO and allowed it to inspect the damage pursuant to the warranty. [DE 38 at ¶71.] NIBCO has refused to compensate Mi Casita for damage to the property or reimburse it for the cost of replacing the faulty product. [Id. at ¶¶34, 88.] Mi Casita claims that it complied with all “conditions precedent” to a breach of warranty claim in accordance with the express warranty. [DE 38 at ¶¶33, 83.] It says that NIBCO was put on notice both by its requests under the warranty and because it had knowledge of the product defects at all times during the manufacturing process. [Id. at ¶87.] Notice remains a contested issue in this case. Mi Casita seeks compensatory and punitive damages and, curiously, asks for a declaration stating that NIBCO is responsible for all past and future claims brought by individual homeowners against Mi Casita. [Id. at 24.]

         After some initial motion practice, we're now on the second amended complaint which contains five counts: breach of express warranty (Count I), breach of implied warranty (Count II), strict product liability pursuant to the Indiana Product Liability Act (Count III), unjust enrichment (Count IV), and Declaratory Judgment (Count V). [DE 38.] NIBCO moved to dismiss the second amended complaint. The motion has some dust on it, through no fault of the parties. As part of a district-wide redistribution of civil cases, this action was reassigned to me on May 1, 2017. [DE 45.] I granted the Parties' motions for oral argument and held a hearing on the motion to dismiss on July 21, 2017. [DE 47.]

         At that hearing, I sought, among other things, to have Mi Casita clarify its claims in the second amended complaint. I also was interested in the parties' opinion on the effect on Mi Casita's claims, if any, of the condominium owners and association assigning their rights to Mi Casita. I received some clarity from the parties on that issue, but it became clear that, despite two opportunities to amend its complaint, Mi Casita's claims need to be narrowed and clarified so that this action may proceed efficiently. I have attempted to do so below in ruling on the motion to dismiss. In addition, at the hearing, for the reasons stated on the record, I dismissed the unjust enrichment and declaratory judgment counts (Counts IV and V of the second amended ...


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