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Dilly v. Pella Corp.

United States District Court, D. South Carolina, Charleston Division

January 4, 2016

DOUG DILLY, on behalf of himself and all others similarly situated, Plaintiffs,
v.
PELLA CORPORATION, Defendant.

ORDER

DAVID C. NORTON UNITED STATES DISTRICT JUDGE

This matter is before the court on defendant Pella Corporation’s (“Pella”) motion for summary judgment. For the reasons set forth below, the court holds that plaintiff’s claims are barred by the applicable statute of limitations and grants Pella’s motion for summary judgment.

I. BACKGROUND

In early 2006, plaintiff Doug Dilly (“Dilly”) contracted with Frye Construction (“Frye”) to construct his home. Pl.’s Resp. Ex. 1, Dilly Depo. 23:2-5. In March 2006, another contractor working on the home purchased Pella windows to be installed in Dilly’s home from Heartland Pella, an independent sales distributor for Pella products. Dilly Depo. 16:23-17:23. Dilly paid Heartland Pella directly for the windows. Id. at 37:15-38:4. Dilly purchased the windows subject to the following limited warranty:

Pella warrants that the non-glass components of its Covered Pella Products, including the Pella Endura Hardware collection, shall be free of manufacturing defects in material workmanship that significantly impair their proper operation and function for ten (10) years from the date of sale by Pella or its authorized dealer. If Pella is given notice of a defect in materials or workmanship occurring within ten (10) years from the date of sale by Pella or its authorized dealer, Pella shall, at its sole option: 1) repair or replace the defective part(s) or product(s) (with cost of labor included only within two [2] years of the date of sale by Pella or its authorized dealer) or 2) refund the original purchase price.

Def.’s Mot. to Dismiss, Ex. 1.

Dilly first noticed problems with his windows in April or May 2007 when he saw water running down the walls during a rainstorm. Dilly Depo. 65:11-18; 67:10. He immediately contacted his contractor and called Pella the following day. Id. at 68:2-6. Pella inspected Dilly’s windows and determined that “the screws were put in wrong at the factory” and replaced the screws on the windows. Id. at 68:14-24. Thereafter, the windows leaked during another rainstorm. Id. at 68:24-69:1. Pella again inspected the windows and determined that it was a gasket problem, thereafter replacing the gaskets. Id. at 69:3-14. The windows continued to suffer from leaking issues, and Pella again inspected the windows and determined that the replaced gaskets were the incorrect gaskets. Id. at 69:15-24. Pella replaced the gaskets for a second time. Id. at 69:19-24. Dilly contacted his insurance company, and the insurance company sent an environmental hygienist to perform testing on Dilly’s windows. Id. at 69:22-24. The environmental hygienist tested the walls and tore out some of the drywall, discovering mold and wet insulation. Id. at 70:10-24. Over the course of the next two years, Dilly continued to experience problems with the windows, and Pella or third parties retained by Heartland Pella continued to inspect, test, and attempt to repair or replace the windows. Id. at 70:5-71:21. On or about August 27, 2008, Heartland Pella made its last service call to Dilly’s home. Id. at 89:19-91:6. After that date, Dilly never made another service request or warranty claim relating to the windows.

In 2007 and 2008, Dilly submitted written communications to Pella or Heartland Pella, either through counsel retained on his behalf or on his own. On October 17, 2007, Dilly’s attorney Michael Mills (“Mills”) sent Pella Corporation Customer Support Specialist Kendra Higginbotham (“Higginbotham”) and Heartland Pella representative Kent Brewster (“Brewster”) a letter regarding Dilly’s water infiltration issues. Def.’s Mot. Ex. 7. The letter stated the following:

Within a few months of installation, in April 2007, the Windows failed, resulting in (among other things) significant water infiltration into the Residence, property damage to the Residence and the Dilly’s personal property, loss of use of the residence and other damages, costs, and expenses. Dr. Dilly promptly notified Pella of the defective nature of the Windows and took reasonable and appropriate steps to prevent and mitigate further damage. Pella representatives have acknowledged that the failure of the Windows is the result of a product defect, a fact confirmed by testing performed by Glazing Specialists International, LLC, the testing firm retained by Pella. . . . Despite the attempted repairs and despite the passage of nearly six months from the time Dr. Dilly advised Pella of the failure of the Windows, the Windows continue to leak.

Id. (emphasis added). Five months later, Dilly sent an e-mail to Brewster, copying his attorney, in which he stated: “I was wondering if . . . [Pella] had been able to discuss what kind of restitution they planned on making with me for the mess, expenses and hardship of the pella windows leaking . . . .” Def.’s Mot. Ex. 8.

Sometime before March 24, 2008, Dilly submitted a formal complaint to the State of Nebraska Office of the Attorney General. Def.’s Mot. Ex. 9. On April 20, 2008, after receiving a copy of Pella’s response to his original complaint, Dilly sent a letter to the Office of the Attorney General. Def.’s Mot. Ex. 4. In the letter, Dilly stated that “[a] brief summary of the facts giving rise to this matter and my efforts over the past year . . . demonstrates that . . . Pella has not ‘rectified’ the defects with the windows.” Id. Dilly extensively outlined the alleged defective nature of the windows and Pella or its representatives’ unsuccessful attempts to remedy the situation. Id. Dilly further stated that the “defective” windows rendered substantial portions of his home unlivable and damaged his property. Id. Further, Dilly stated that “Heartland Pella admitted that the Windows were defective and that the gaskets and sashes had failed and that the screws were put in wrong at the Pella factory.” Id. Dilly complained that despite continued representations to the contrary, Pella had not provided “a solution and [had] not by any stretch of the imagination live up to Pella’s promises to provide a high-quality, defect free product that protects our home from the elements.” Id. In conclusion, Dilly stated that he had contacted the Attorney General’s Office “in a final attempt to resolve this matter with Pella before resorting to other legal remedies.” Id. (emphasis added).

On June 20, 2008, the Office of the Attorney General sent a final letter to Dilly notifying him that the mediation efforts were not bringing the dispute to a satisfactory resolution and that it would not be taking any action against Pella under the Nebraska Consumer Protection Act. Def.’s Mot. Ex. 11. The Office of the Attorney General did, however, recommend that Dilly consult with an attorney. Id. (“Our determination in this matter is not intended as an opinion on the merits of your case. If you wish to take further action, you may consult with private legal counsel.”).

In 2013, Dilly read online about a pending lawsuit against Pella involving inherently defective windows. Dilly Depo. 113:25-114:1. Dilly then contacted class counsel. Id. at 114:8-10. On July 30, 2014, Dilly filed a class action complaint against Pella in the United States District Court for the District of Nebraska, alleging jurisdiction based on diversity of citizenship. The complaint brings the following eleven causes of action: (1) violation of the Nebraska Uniform Deceptive Uniform Trade Practices Act (“NUDTPA”); (2) negligence; (3) negligent misrepresentation; (4) breach of implied warranty of merchantability; (5) breach of implied warranty of fitness for a particular purpose; (6) breach of express warranty; (7) fraudulent misrepresentation; (8) fraudulent concealment; (9) unjust enrichment; (10) violation of the Magnuson-Moss Warranty Act (“MMWA”); and (11) declaratory relief. Dilly contends that the windows are defective in that water permeates the windows through “four common leakage paths: (a) the glazing pocket; (b) the aluminum cladding and wood; (c) the crank hardware and fasteners; and (d) the frame to sash joint.” Compl. ¶ 11. Dilly further alleges that Pella knew, or but for its negligence should have been aware, of the defect when it sold the windows. Id. ¶ 19.

Pella filed a motion to dismiss on September 29, 2014. Dilly opposed the motion on November 7, 2014, and Pella replied on December 15, 2014. The motion has been fully briefed and is ripe for the court’s review; however, the court has not yet issued an order on the motion. Pella filed the instant motion for summary judgment on September 1, 2015. Dilly responded on September 18, 2015, and Pella replied on September 28, 2015. The motion has been fully briefed and is now ripe for the court’s review.[1]

II. STANDARDS

Summary judgment shall be granted “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). “By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Id. at 248. “[S]ummary judgment will not lie if the dispute about a material fact is ‘genuine, ’ that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

“[A]t the summary judgment stage the judge’s function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Id. at 249. When the party moving for summary judgment does not bear the ultimate burden of persuasion at trial, it may discharge its burden by demonstrating to the court that there is an absence of evidence to support the non-moving party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The non-movant must then “make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Id. at 322. The court should view the evidence in the light most favorable to the non-moving party and draw all inferences in its favor. Anderson, 477 U.S. at 255.

This case is predicated on diversity jurisdiction and was filed in federal court, so it is governed by state substantive law and federal procedural law. Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 416 (2010) (citing Hanna v. Plumer, 380 U.S. 460, 465 (1965)). “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 (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 Nebraska substantive law and Fourth Circuit procedural law.

III. DISCUSSION

Pella first argues that all of Dilly’s claims are barred by the applicable statutes of limitations. Def.’s Mot. 2. Dilly contends that he first discovered the defective condition of the windows in 2013 when they were removed from his home. Thus, under the discovery rule, Dilly claims that the applicable statute of limitations did not accrue until 2013 and that his claims are therefore timely. Pl.’s Resp. 6-20. Alternatively, Dilly argues that the respective statutes of limitations are tolled by the doctrines of fraudulent concealment and equitable estoppel. Pl.’s Resp. 22-27.

A.Accrual of the Respective Statute of Limitations

The court must first determine when the statute of limitations accrued for each cause of action. The court will analyze the statute of limitations applicable to each of Dilly’s claims below and will then analyze whether the various statutes of limitations are tolled by either equitable estoppel or fraudulent concealment.

1. NUDTPA

Civil actions arising under the NUDTPA can be brought “only within four years from the date of the purchase of goods or services.” Neb. Rev. Stat. § 87-303.10. Dilly purchased the windows in 2006. Therefore, unless a tolling doctrine applies, Dilly’s NUDTPA claim expired in 2010, four years before Dilly filed the present action. As more fully set forth below, neither fraudulent concealment nor equitable estoppel tolls the statutes of limitations under these circumstances. Therefore, the court grants Pella’s motion for summary judgment as it pertains to Dilly’s NUDTPA claim.

2. Negligence

Under Nebraska law, a four-year statute of limitations applies to negligence claims. Neb. Rev. Stat. § 25-207(3). Pella argues that Dilly’s negligence claim is barred by the four-year statute of limitations because it accrued in 2006. Def.’s Mot. 14. Dilly argues that the statute of limitations has not expired because the discovery rule applies to toll the limitations period. Pl.’s Resp. 15-16.

“In a negligence action, it has generally been stated that a statute of limitations begins to run as soon as the cause of action accrues, and an action in tort accrues as soon as the act or omission occurs.” Shlien v. Bd. of Regents, Univ. of Neb., 640 N.W.2d 643, 650 (Neb. 2002) (citing Berntsen v. Coopers & Lybrand, 546 N.W.2d 310 (Neb. 1996)). However, the Nebraska Supreme Court has determined that the discovery rule applies in certain cases. Id. “[I]n a case where the injury is not obvious and is neither discovered nor discoverable within the limitations period running from the wrongful act or omission, the statute of limitations does not begin to run until the potential plaintiff discovers, or with reasonable diligence should have discovered, the injury.” Id. The Supreme Court of Nebraska has stated that “[d]iscovery occurs when the party knows of facts sufficient to put a person of ordinary intelligence and prudence on inquiry which, if pursued, would lead to the discovery of facts constituting the basis of the cause of action.” Giese v. Stice, 567 N.W.2d 156, 165 (Neb. 1997) (quoting Zion Wheel Baptist Church v. Herzog, 543 N.W.2d 445, 450 (Neb. 1996)). “The discovery rule applies when an individual’s injury is not obvious and the individual is wholly unaware that he or she has suffered an injury or damage.” Mace-Main v. City of Omaha, 773 N.W.2d 152, 159 (Neb. Ct. App. 2009) (emphasis added).

“[T]he beneficence of the discovery rule is not bestowed on a potential plaintiff where the potential plaintiff in fact discovers, or in the exercise of reasonable diligence should have discovered, the injury within the initial period of limitations running from the wrongful act or omission.” Id. “‘Discovery, ’ in the context of statutes of limitations, does not refer to the legal right to seek redress, but to the fact that one knows of the existence of an injury.” Alston v. Hormel Foods Corp., 730 N.W.2d 376, 385 (Neb. 2007). The Nebraska Supreme Court has recognized that “[a]lthough we acknowledge that we have occasionally referred to discovery being the time when a claim ‘accrues, ’ the discovery rule, as it exists in Nebraska, is better understood as a tolling doctrine.” Id. at 384-85.

Pella argues that even if the discovery rule applies, Dilly’s negligence claim is barred because Dilly was aware of the defect by August 2008 at the latest. In response, Dilly argues that he “lacked information about the nature of the defect because it was not disclosed by Pella, and at each attempted repair, Pella, in its expert capacity, provided Plaintiff with a new explanation for the leaks along with a corresponding repair.” Pl.’s Resp. 16.

The undisputed evidence on the record demonstrates that Dilly was fully aware of the defects in the windows by October 17, 2007. Dilly’s attorney continuously uses the words “defect” and “defective” throughout the letter he sent to Pella representatives on Dilly’s behalf. Def.’s Mot. Ex. 7. The letter states that the windows failed in April 2007, resulting in significant water infiltration, property damage, loss of use of the residence, and other damages, costs, and expenses. Id. The letter further states that despite Pella’s attempted repairs, the windows continued to leak, and Dilly’s attorney even threatened legal action. Id.

Dilly’s correspondence with the Office of the Attorney General further demonstrates that he was completely mindful of the alleged defective nature of the windows and Pella’s refusal to repair the defect or pay for the damage to his home. Def.’s Mot. Ex. 4. In the April 20, 2008 letter, Dilly stated that the defective windows rendered substantial portions of his home unlivable and caused damage to his property. Id. Dilly further stated that despite its continuous representations to the contrary, Pella had failed to provide a solution and had not lived up to its promises to provide a defect free product. Id. Dilly indicated that his contacting the Office of the Attorney General was his last attempt to remedy the situation before resorting to other legal remedies. Id.

Indeed, during his deposition, Dilly testified that he “started considering [filing this lawsuit] after it had gone on for many months and [he] wasn’t getting answers.” Dilly Depo. 96:5-13. When asked whether it would be fair to say that at the time the letter was written, Dilly knew that there was a problem with the windows, Dilly responded in the affirmative. Dilly Depo. 97:15-18. When asked whether, at the time of the October 17, 2007 letter, it was fair to say that he knew he had a potential remedy via lawsuit, Dilly responded: “I didn’t know that. I knew that, you know, maybe it was an option. I don’t know if it would have remedied the problem. . . . It was easier for me to put this in the back of my mind for awhile and try not to think about it.” Id. at 97:19- 98:4. Dilly further indicated that “[i]t was too stressful to think about it, ” id. ...


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