United States District Court, D. South Carolina, Charleston Division
JOHN SADLER and GERIANN GATZIOLIS, on behalf of themselves and all others similarly situated, Plaintiffs,
PELLA CORPORATION, Defendant
John Sadler, Geriann Gatziolis, Plaintiffs
(2:14-cv-03051-DCN): Jonathan Shub, Sr, LEAD ATTORNEY; Daniel
K Bryson, Whitfield Bryson & Mason LLP, Raleigh, NC; Frank
Michael Petosa, Morgan and Morgan, Plantation, FL; Marc H
Edelson, Hoffman and Edelson Law Offices, Doylestown, PA;
Matthew E Lee, PRO HAC VICE, Whitfield Bryson and Mason,
Raleigh, NC; Scott A George, Seeger Weiss, Philadelphia, PA;
Jeffrey A Leon, Quantum Legal, Highland Park, IL.
Pella Corporation, Defendant (2:14-cv-03051-DCN): G Mark
Phillips, Michael Tucker Cole, LEAD ATTORNEYS, Nelson Mullins
Riley and Scarborough (Ch), Charleston, SC; John P. Mandler,
LEAD ATTORNEY, Faegre, Baker Law Firm - Minneapolis Office,
Minneapolis, MN; Kevin L Morrow, Faegre Baker Daniels,
Chicago, IL; Mark J Winebrenner, Shane A Anderson, Faegre
Baker Daniels, Minneapolis, MN.
Pella Corporation Architect and Designer Series Windows
Marketing, Sales Practices and Products Liability Litigation,
In Re (2:14-mn-00001-DCN): John P. Mandler, LEAD
ATTORNEY, Faegre, Baker Law Firm - Minneapolis Office,
Minneapolis, MN; Shane A Anderson, Faegre Baker Daniels,
Plaintiff's Lead Counsel, Plaintiff (2:14-mn-00001-DCN):
Daniel K Bryson, LEAD ATTORNEY, Whitfield Bryson & Mason LLP,
Raleigh, NC; Jonathan Shub, LEAD ATTORNEY, PRO HAC VICE, Kohn
Swift and graft, Philadelphia, PA.
Plaintiff's Liaison Counsel, Plaintiff
(2:14-mn-00001-DCN): Justin O'Toole Lucey, LEAD ATTORNEY,
Justin O'Toole Lucey Law Firm, Mt Pleasant, SC.
Pella Corporation, Defendant (2:14-mn-00001-DCN): Amy R
Fiterman, LEAD ATTORNEY, Mark J Winebrenner, Shane A
Anderson, Faegre Baker Daniels, Minneapolis, MN; G Mark
Phillips, Michael Tucker Cole, LEAD ATTORNEYS, Nelson Mullins
Riley and Scarborough (Ch), Charleston, SC; John P. Mandler,
LEAD ATTORNEY, Faegre, Baker Law Firm - Minneapolis Office,
Minneapolis, MN; John A Roberts, Kevin L Morrow, Faegre Baker
Daniels, Chicago, IL.
C. NORTON, UNITED STATES DISTRICT JUDGE.
matter is before the court on a motion to dismiss filed by
Pella Corporation (" Pella" ). The court grants in
part and denies in part Pella's motion as set forth
John Sadler (" Sadler" ) installed Pella windows in
his Des Plaines, Illinois home in late 2002 and early 2003.
Am. Compl. ¶ 30. Sadler discovered fungus growing under
his windows in 2011 and discovered rot in his windows in
2013, at which time he contacted Pella. Id. ¶
34. Pella offered to replace the windows, but indicated that
Sadler would have to pay for the cost of the replacement
windows and the cost of installation. Id. ¶ 35.
Unsatisfied, Sadler declined Pella's offer. Id.
Geriann Gatziolis's (" Gatziolis" ) St.
Charles, Illinois home was built in 2004 and Pella windows
were installed the same year. Id. ¶ 36.
Gatziolis experienced problems with her windows about four
years after they were installed, but did not observe any
indication of rot at that time. Id. ¶ 40. Her
windows began to exhibit worse signs of failure in 2011, at
which point she contacted Pella. Id. Pella inspected
Gatziolis's home and denied that her windows were
contend that their windows suffer from various design
deficiencies, including " a defect in the design of the
sill extrusion and sill nailing fin attachment[,] as well as
a defect in the design of [sic] allowing a gap between the
jamb gasket and the sill gasket." Id. ¶
51. Plaintiffs allege that due to these design defects, water
is permitted to be trapped between the aluminum and the
operable wood frame, permitting leaks and causing damage to
the windows and other property within the home. Id.
Plaintiffs further allege that Pella knew, or but for its
negligence should have been aware, of the defects.
Id. ¶ 24.
5, 2014, plaintiffs filed a class action complaint against
Pella in the United States District Court for the Northern
District of Illinois, alleging jurisdiction based on
diversity of citizenship. On June 10, 2014, plaintiffs
amended their complaint, bringing the following ten causes of
action: (1) negligence; (2) breach of implied warranty of
merchantability; (3) breach of implied warranty of fitness
for a particular purpose; (4) breach of express warranty; (5)
violation of the Illinois Consumer Fraud and Deceptive
Business Practices Act (" ICFA" ); (6) fraudulent
misrepresentation; (7) fraudulent concealment; (8) unjust
enrichment; (9) violation of the Magnuson-Moss Warranty Act
(" MMWA" ); and (10) declaratory relief.
30, 2014, the United States Judicial Panel on Multidistrict
Litigation transferred plaintiffs' case to this court as
part of the consolidated multidistrict litigation. Pella
filed the instant motion to dismiss on August 29, 2014.
Plaintiffs opposed the motion on October 17, 2014, and Pella
replied on October 31, 2014. The motion has been fully
briefed and is ripe for the court's review.
Motion to Dismiss
Federal Rule of Civil Procedure 12(b)(6), a party may move to
dismiss for " failure to state a claim upon which relief
can be granted." When considering a Rule 12(b)(6) motion
to dismiss, the court must " accept all well-pleaded
allegations in the plaintiff's complaint as true and
draw all reasonable factual inferences from those facts in
the plaintiff's favor." Edwards v. City of
Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999). But "
the tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal
conclusions." Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
motion to dismiss, the court's task is limited to
determining whether the complaint states a " plausible
claim for relief." Id. at 679. A complaint must
contain sufficient factual allegations in addition to legal
conclusions. Although Rule 8(a)(2) requires only a "
short and plain statement of the claim showing that the
pleader is entitled to relief," " a formulaic
recitation of the elements of a cause of action will not
do." Bell A. Corp. v. Twombly, 550 U.S. 544,
555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The "
complaint must contain sufficient factual matter, accepted as
true, to 'state a claim to relief that is plausible on
its face.'" Iqbal, 556
U.S. at 678 (quoting Twombly, 550
U.S. at 570). " Facts pled that are 'merely
consistent with' liability are not sufficient."
A Soc'y Without a Name v. Virginia, 655 F.3d
342, 346 (4th Cir. 2011) (quoting
Iqbal, 556 U.S. at 678).
case is predicated on diversity jurisdiction and was filed in
federal court, so it is governed by state substantive law and
federal procedural law. Gasperini v. Ctr. for Humanities,
Inc., 518 U.S. 415, 427, 116 S.Ct. 2211, 135 L.Ed.2d 659
(1996). " In multidistrict litigation, the law of the
transferee circuit governs questions of federal law."
In re KBR, Inc., 736 F.Supp.2d 954, 957 (D. Md.
2010) modified on reh'g sub nom. In re KBR, Inc.,
Burn Pit Litig., 925 F.Supp.2d 752 (D. Md. 2013) vacated
and remanded on other grounds, 744 F.3d 326 (4th Cir. 2014);
see also In re Gen. Am. Life Ins. Co. Sales Practices
Litig., 391 F.3d 907, 911 (8th Cir. 2004); Menowitz
v. Brown, 991 F.2d 36, 40 (2d Cir. 1993); In re
Korean Air Lines Disaster of Sept. 1, 1983, 829 F.2d
1171, 1176, 265 U.S.App.D.C. 39 (D.C. Cir. 1987); cf.
Bradley v. United States, 161 F.3d 777, 782 n.4 (4th
Cir. 1998) (applying Fourth Circuit law to questions of
federal law in a case transferred from the Fifth Circuit).
Therefore, this court must apply Illinois substantive law and
Fourth Circuit procedural law.
Implied Warranty Claims
argues that plaintiffs' claims for breach of the implied
warranty of merchantability and the implied warranty of
fitness for a particular purpose fail because they are barred
by the statute of limitations. Pella also argues that: (i)
Gatziolis's implied warranty claims fail because she
cannot establish privity with Pella; and (ii) plaintiffs'
claim for breach of the implied warranty of fitness for a
particular purpose fails because the windows were used for
their ordinary purpose. The court will address each argument
Statute of Limitations
Illinois law, the statute of limitations for a breach of
warranty claim is four years. 810 Ill.Comp.Stat. 5/2-725(1).
Ordinarily, the cause of action accrues when the breach
occurs. 810 Ill.Comp.Stat. 5/2-725(2). A breach occurs when
tender of delivery is made, unless the warranty at issue
" explicitly extends to future performance of the goods
and discovery of the breach must await the time of such
performance," in which case " the cause of action
accrues when the breach is or should have been
discovered." Id. " [I]mplied warranties by
definition cannot explicitly extend to future
performance." Stoltzner v. Am. Motors Jeep Corp.
Inc., 127 Ill.App.3d 816, 469 N.E.2d 443, 445, 82
Ill.Dec. 909 (Ill.App.Ct. 1984). Pella argues because
Sadler's windows were installed in 2003 at the latest,
Am. Compl. ¶ 30, and Gatziolis's windows were
installed in 2004, Id. ¶ 36, the statute of
limitations for each plaintiff's claim expired by 2008,
about six years before the current action was filed.
argue that the statute of limitations was tolled by the
doctrine of equitable estoppel because Pella concealed the
defect from plaintiffs and other window owners. Id.
¶ ¶ 67, 68. Pella also contends that plaintiffs
have failed to adequately plead equitable estoppel.
estoppel tolls the running of a statute of limitations when
the party claiming estoppel demonstrates that:
(1) the other party misrepresented or concealed material
facts; (2) the other party knew at the time the
representations were made that the representations were
untrue; (3) the party claiming estoppel did not know that the
representations were untrue when the representations were
made and when they were acted upon; (4) the other party
intended or reasonably expected the representations to be
acted upon by the party claiming estoppel or by the public
generally; (5) the party claiming estoppel reasonably relied
upon the representations in good faith and to their
detriment; and (6) the party claiming estoppel has been
prejudiced by his reliance on the representations.
Parks v. Kownacki, 193 Ill.2d 164, 737 N.E.2d 287,
296, 249 Ill.Dec. 897 (2000). Here, plaintiffs' equitable
estoppel claim appears to be based on a theory of fraudulent
concealment. Compl. ¶ ¶ 67, 68 (stating
that " Pella has known of the defects . . . and has
concealed from owners of the [w]indows . . . the defective
nature of the windows," and that " [g]iven
Pella's failure to disclose this known but non-public
information . . . Pella is estopped from" enforcing the
statute of limitations).
law provides that:
If a person liable to an action fraudulently conceals the
cause of such action from the knowledge of the person
entitled thereto, the action may be commenced at any time
within 5 years after the person entitled to bring the same
discovers that he or she has such cause of action, and not
735 Ill.Comp.Stat. 5/13-215. As with equitable estoppel
generally, a plaintiff invoking the doctrine of fraudulent
concealment must show " affirmative acts by the
defendant which were designed to prevent, and in fact did
prevent, the discovery of the claim." Cangemi v.
Advocate S. Suburban Hosp., 364 Ill.App.3d 446, 845
N.E.2d 792, 804, 300 Ill.Dec. 903 (Ill.App.Ct. 2006)
(citation omitted); see also Dancor Int'l, Ltd. v.
Friedman, Goldberg & Mintz, 288 Ill.App.3d 666, 681
N.E.2d 617, 623, 224 Ill.Dec. 302 (Ill.App.Ct. 1997) ("
The concealment of a cause of action sufficient to toll the
statute of limitations requires affirmative acts or
representations designed to prevent discovery of the cause of
action or to lull or induce a claimant into delaying the
filing of his claim." ). " Mere silence of the
defendant and the mere failure on the part of the plaintiff
to learn of a cause of action do not amount to fraudulent
concealment." Cangemi, 845
N.E.2d at 804.
argues that plaintiffs' have not pleaded the requisite
" affirmative act" because their estoppel argument
is based on Pella's " failure to disclose." Am.
Compl. ¶ 68. Plaintiffs argue that equitable estoppel
may be established by acts of concealment and that Pella
engaged in such acts by failing to disclose the defect to
customers. Pl.'s Resp. at 10-11.
clear that equitable estoppel, particularly in the form of
fraudulent concealment, can be established by " acts of
concealment," including the breach of a duty to disclose
material information. DeLuna v. Burciaga, 223 Ill.2d
49, 857 N.E.2d 229, 246, 306 Ill.Dec. 136 (Ill. 2006); see
also Parks, 737 N.E.2d at 296 (" To establish
equitable estoppel, the party claiming estoppel must
demonstrate that: (1) the other party misrepresented or
concealed material facts . . . ." ) (emphasis added).
" A duty to disclose a material fact may arise out of
several situations[,] [f]irst, if plaintiff and defendant are
in a fiduciary or confidential relationship" and "
[s]econd, . . . where plaintiff places trust and confidence
in defendant, thereby placing defendant in a position of
influence and superiority over plaintiff."
DeLuna, 857 N.E.2d at 246 (quoting
Connick v. Suzuki Motor Co., 174 Ill.2d 482, 675
N.E.2d 584, 593, 221 Ill.Dec. 389 (Ill. 1996)). A duty to
disclose material information can also arise " when the
defendant's acts contribute to the plaintiff's
misapprehension of a material fact and the defendant
intentionally fails to correct plaintiff's
misapprehension." Coca-Cola Co. Foods Div. v. Olmarc
Packaging Co., 620 F.Supp. 966, 973 (N.D.Ill. 1985).
amended complaint alleges actions by Pella which could
plausibly have contributed to plaintiffs' misapprehension
that the windows were not defective: specifically, that Pella
brought the windows to market and undertook active and
ongoing steps to conceal the defect. Am. Compl. ¶ 153,
160. The amended complaint also alleges that Pella knew of
the defect and knew that customers would not be able to
detect it, even after diligent inspection, but chose to omit
any mention of the defect in the course of selling and
distributing the windows. Id. ¶ 23, 28, 29.
Though these allegations are somewhat conclusory, courts have
found similar allegations sufficient to establish the
possibility of a duty to disclose at the motion to dismiss
stage. See Design Ideas, Ltd. v. Bed Bath & Beyond,
Inc., 2013 WL 2489174, at *5 (C.D. Ill. June 10, 2013)
(denying motion to dismiss counterclaim for fraudulent
concealment where counterclaimant alleged that counterclaim
defendant " intentionally concealed" a material
fact during contract negotiation, even though counterclaimant
did not allege any affirmative act that created their
misapprehension). Therefore, the court finds that plaintiffs
have sufficiently pleaded facts showing that Pella breached a
duty to disclose the defect.
also argues that plaintiffs have failed to plead their
fraudulent concealment claim in compliance with the standards
of Federal Rule of Civil Procedure 9(b). Def.'s Resp.
20-21. Rule 9(b) provides that a party alleging fraud "
must state with particularity the circumstances constituting
fraud." This rule extends to claims for fraudulent
concealment. Beauchem v. Rockford Prods. Corp., 2004
WL 432328, at *1 (N.D.Ill. Feb. 6, 2004) (" Fraudulent
concealment must be pled with particularity." );
Breeden v. Richmond Cmty. Coll., 171 F.R.D. 189, 195
(M.D.N.C. 1997) (" [E]ven in a case of fraudulent
concealment or omission, a plaintiff must comply with the
heightened pleading requirements of Fed.R.Civ.P. 9(b)."
). Generally, in order to satisfy Rule 9(b), the complaint
must allege the " who, what, when, where and how of the
alleged fraud," U.S. ex rel. Ahumada v. NISH,
756 F.3d 268, 280 (4th Cir. 2014), or the " first
paragraph of any newspaper story." Great Plains
Trust Co. v. Union P. R.R. Co., 492 F.3d 986, 995 (8th
Cir. 2007); see also U.S. ex rel. Elms v. Accenture
LLP, 341 Fed.Appx. 869, 872 (4th Cir. 2009) (holding
Rule 9(b) requires a plaintiff to allege " the time,
place, and contents of the false representations, as well as
the identity of the person making the misrepresentation and
what he obtained thereby" ).
9(b) operates somewhat differently when evaluating claims
based on omissions. Breeden, 171
F.R.D. at 195 (recognizing that the usual Rule 9(b)
requirements " work well for cases of affirmative
misrepresentations because such are discrete, observable
events which can be particularized," while " fraud
by omission . . . is by its very nature, difficult to plead
with particularity" (quoting Daher v. G.D. Searle &
Co., 695 F.Supp. 436, 440 (D. Minn. 1988))). In order to
plead fraud by omission in compliance with the pleading
requirements of Rule 9(b), " a plaintiff usually will be
required to allege the following with reasonable
(1) the relationship or situation giving rise to the duty to
speak, (2) the event or events triggering the duty to speak,
and/or the general time period over which the relationship
arose and the fraudulent conduct occurred, (3) the general
content of the information that was withheld and the reason
for its materiality, (4) the identity of those under a duty
who failed to make such disclosures, (5) what those
defendant(s) gained by withholding information, (6) why
plaintiff's reliance on the omission was both reasonable
and detrimental, and (7) the damages proximately flowing from
discussed above, plaintiffs have sufficiently pleaded facts
giving rise to Pella's duty to speak by alleging actions
by Pella which could have contributed to plaintiffs'
misapprehension that the windows were not defective.
Plaintiffs have also pleaded: the general content of the
information that was withheld, i.e., the existence of the
defect; what Pella gained by withholding such information,
i.e., increased window sales; why plaintiffs' reliance on
Pella's omission was reasonable and detrimental; and
damages. See Am. Compl. ¶ ¶ 164 (alleging
plaintiffs " suffered a loss of money . . . as a result
of Pella's fraudulent concealment and nondisclosure
because  they would not have purchased the [w]indows on the
same terms if the true facts concerning the windows had been
known" ). The court finds these allegations sufficient
to satisfy the requirements of Rule 9(b) and adequately state
a claim that Pella fraudulently concealed the basis of their
implied warranty claims.
fraudulent concealment theory, plaintiffs had five years from
the time they discovered the basis of their implied warranty
claims to bring such claims. 735 Ill.Comp.Stat. 5/13-215.
Both plaintiffs appear to have discovered the defect, and
thus the basis for their claim, in 2011--when Sadler
discovered fungus growing under his windows and Gatziolis
discovered signs of rot in her windows. See Am. Compl.
¶ ¶ 34, 40. Plaintiffs filed the present action in
2014, well within the five year period permitted by 735
Ill.Comp.Stat. 5/13-215. Therefore, the court finds that
plaintiffs' implied warranty claims are not barred by the
statute of limitations, under the doctrine of equitable
Privity and Gatziolis
also argues that Gatziolis's implied warranty claims fail
because she was not in privity with Pella.
law does not allow plaintiffs to assert implied warranty
claims against product manufacturers where the plaintiffs did
not purchase the product. Bd. of Educ. of City of Chicago
v. A, C & S, Inc., 131 Ill.2d 428, 546 N.E.2d 580, 595,
137 Ill.Dec. 635 (Ill. 1989) (" [I]n order to state a
claim against the defendant for breach of implied warranty,
privity must exist between the plaintiff and defendant."
). However, " absence of privity will not bar an action
based on implied warranty when the plaintiff is a third-party
beneficiary to a contract." Chrysler Corp. v. Haden
Uniking Corp., 1992 WL 373039, at *8 (N.D. Ill.Dec. 3,
1992) (collecting cases). " To be a 'direct'
beneficiary and therefore the third party beneficiary of a
contract, the parties to the agreement must 'have
manifested in their contract an intention to confer a benefit
upon the third party.'" Hunter v. Old Ben Coal
Co., 844 F.2d 428, 432 (7th Cir. 1988) (quoting
Altevogt v. Brinkoetter, 85 Ill.2d 44, 421 N.E.2d
182, 187, 51 Ill.Dec. 674 (Ill. 1981)).
asserts that she was the intended third party beneficiary of
the sale between Pella and its distributors, and is therefore
entitled to enforce the implied warranty claim based on
Pella's false description of the product. Pls.' Resp.
12; Am. Compl. ¶ 89, 96. " The law of Illinois is
that third-party beneficiary status may only be conferred
where the identification of the third party to be benefited
is clear and the benefit to him is direct." Spiegel
v. Sharp Elec. Corp.,125 Ill.App.3d 897, 466 N.E.2d
1040, 1044, 81 Ill.Dec. 238 (Ill.App.Ct. 1984). A plaintiff
cannot recover as a third-party beneficiary unless the facts
" show an intent on the part of the [initial buyer] to
confer the benefit." Id. at 1045. A
seller's knowledge that the goods in question will be
resold is not sufficient to render subsequent purchasers
third party beneficiaries. Id. (stating that ...