First Nonprofit Ins. Co. v. Meenan Oil LLC

462 F.Supp.3d 537

FIRST NONPROFIT INSURANCE COMPANY a/s/o Self Help Movement, Inc., Plaintiff

v.MEENAN OIL LLC and Limbach Construction, Defendants

CIVIL ACTION No.20-cv-477-MMB

United States District Court, E.D. Pennsylvania.

Filed May 26, 2020

Joseph L. McGlynn, De Luca Levine, LLC, Blue Bell, PA, for Plaintiff.

Thomas J. Wagner, Law Offices of Thomas J. Wagner, Philadelphia, PA, for Defendant Meenan Oil LLC.

Jay D. Branderbit, Kent & McBride, PC, Philadelphia, PA, for Defendant Limbach Construction.

MEMORANDUM RE: DEFENDANT MEENAN'S MOTION TO DISMISS

Baylson, J.

I. Introduction

First Nonprofit Insurance Company ("Plaintiff") provided property insurance to Self Help Movement Inc. ("Self Help") in connection with a commercial property located in Philadelphia (the "Property"). Plaintiff paid a claim submitted by Self Help after the Property sustained water damage due to a malfunction in the HVAC system. Plaintiff has brought suit against Meenan Oil LLC ("Meenan"),¹ which performed maintenance work on the Property's HVAC system, and Limbach Construction, Inc. ("Limbach"), which installed the HVAC system. Plaintiff seeks to recover in subrogation for money it paid to Self Help.²

Currently before the Court is Defendant Meenan's Motion to Dismiss Pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6). Defendant Limbach has not moved to dismiss. For the reasons that follow, Meenan's Motion to Dismiss is GRANTED IN PART and DENIED IN PART.

II. Factual History

The factual background is drawn largely from the allegations in the Complaint against Defendant Meenan.³ The Court takes the facts alleged by Plaintiff as true and construes them in its favor, as is required at the motion to dismiss stage. Phillips v. Cty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).

Self Help owns a property located in Philadelphia that was covered by a policy of insurance maintained by Plaintiff. (Compl. re Meenan ¶ 3.) Defendant Limbach installed an HVAC system at the Property and performed maintenance inspections.⁴ (Compl. re Limbach ¶ 15(a).) On December 11, 2016, Defendant Meenan serviced the HVAC system at Self Help's Property. (Compl. re Meenan ¶ 6.) On January 14, 2017, the sprinkler discharged which caused water damage to the Property. (Compl. re Meenan ¶ 7.) A subsequent investigation revealed that the sprinkler activated because the HVAC system overheated. (Compl. re Meenan ¶ 11.) Plaintiff paid Self Help for the damage to the Property pursuant to its obligations under the insurance contract, and became subrogated to the claims in this action. (Compl. re Meenan ¶ 12.)

III. Procedural History

Plaintiff filed its complaint against Limbach in the Court of Common Pleas of Philadelphia County on January 9, 2019 asserting claims for Negligence (Count I); Breach of Contract (Count II); and Breach of Implied Warranty of Quality Workmanship (Count III). (Compl. re Limbach.) Plaintiff filed a separate, related complaint against Meenan on December 13, 2019 asserting claims for Breach of Contract (Count I) and Breach of Implied Warranty of Quality Workmanship (Count II). (Compl. re Meenan.) The Court of Common Pleas consolidated the Limbach action and the Meenan action on December 20, 2019. (ECF 1, Notice of Removal Ex. C.)

Meenan, with the consent of Limbach, removed the consolidated case to this Court on January 27, 2020 on the basis of diversity jurisdiction.⁵ (ECF 1, Notice of Removal; id. Ex. E (Limbach Consent).) Meenan timely moved to dismiss pursuant to Rule 12(b)(6) on February 13, 2020. (ECF 2.) Plaintiff responded in opposition, (ECF 4), and Meenan replied in support, (ECF 5.) With leave of Court, Plaintiff filed a sur-reply. (ECF 6-1 (Sur-Reply); ECF 7 (Order).)

IV. Legal Standard

In considering a motion to dismiss under Rule 12(b)(6), the court "accept[s] all factual allegations as true [and] construe[s] the complaint in the light most favorable to the plaintiff." Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011) (internal quotation marks and citation omitted). The Supreme Court has instructed that "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).

Iqbal explained that although a court must accept as true all of the factual allegations contained in a complaint, that requirement does not apply to legal conclusions; therefore, pleadings must include factual allegations to support the legal claims asserted. 556 U.S. at 678, 129 S.Ct. 1937. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Accordingly, to survive a motion to dismiss, a plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

V. Discussion

A. Pennsylvania Law Applies

Because the Court is sitting in diversity, the Court applies the law of the state of Pennsylvania to each of Plaintiff's state law claims. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) ("Except in matters governed by the Federal Constitution or by acts of Congress, the law to be applied in any case is the law of the state."); Liggon-Redding v. Estate of Sugarman, 659 F.3d 258, 262 (3d Cir. 2011) ("A federal court sitting in diversity must apply state substantive law...."). In the absence of authoritative guidance from the Supreme Court of Pennsylvania, the Court looks to "decisions of [Pennsylvania] intermediate appellate courts, of federal courts interpreting [Pennsylvania's] law, and of other state supreme courts that have addressed the issue...." Spence v. ESAB Grp., Inc., 623 F.3d 212, 216 (3d Cir. 2010).

B. Parties’ Arguments

Meenan raises three arguments. Plaintiff responds in opposition to each point.

First, Meenan argues that the Service Agreement it entered into with Self Help requires dismissal of the entire Complaint. (ECF 2-2, Motion to Dismiss at 2.) Meenan asserts contract defenses based on three provisions in a Service Agreement that it contends governed the relationship between itself and Self Help. (Id. at 5–6, 10–11.) The Service Agreement was attached by Meenan to its Motion to Dismiss, but was not attached to or otherwise referenced in the Complaint. Plaintiff opposes consideration of the Service Agreement because at the motion to dismiss stage, matters extraneous to the pleadings are outside the scope of review. (ECF 4-1, Opposition at 5.) In the alternative, Plaintiff argues that the Service Agreement (and each specific provision Meenan raises as a defense) is unconscionable and void. (Id. at 7–11.)

Second, Meenan contends that Count I, for breach of contract, is time barred. (Motion to Dismiss at 9.) Meenan's statute of limitations argument relies on the statute of limitations for tort claims, which Meenan contends is applicable because the gist of the action doctrine requires that the breach of contract claim be construed as a tort claim. (Id. at 7–9.) Plaintiff responds that the gist of the action doctrine only applies to improper attempts to recast claims in contract as claims in tort, and that it is therefore inapplicable to Count I, which asserts a claim for breach of contract. (Opposition at 13.)

Third, Meenan argues that Count II, for breach of the implied warranty of quality workmanship, should be dismissed because such claims are generally disfavored in the law and should be construed narrowly. (Motion to Dismiss at 6–7.) Plaintiff responds that numerous state and federal courts interpreting Pennsylvania law have implied a warranty to perform in a reasonable and workmanlike manner, and that Count II is consistent with this theory. (Opposition at 12.)

C. Analysis

Each of Meenan's arguments will be addressed in turn. The Court concludes that (1) the Service Agreement is not a document that may be considered at this stage of the litigation and therefore the agreement does not require dismissal of the Complaint; (2) Count I, for breach of contract, is properly considered a claim in tort pursuant to the gist of the action doctrine and is barred by Pennsylvania's two-year statute of limitations for tort claims; and (3) Count II, for breach of the implied warranty of quality workmanship, states a claim to relief.

1. The Service Agreement Does Not Require Dismissal of the Complaint

Meenan asserts three contract defenses, all of which derive from the Service Agreement that Meenan attached as Exhibit A to the Motion to Dismiss. (ECF 2-4, Service Agreement.) Meenan asserts that each of these defenses requires dismissal of the entire Complaint. Evaluating the merits of Meenan's contract-based arguments is appropriate only if consideration of the Service Agreement is proper. Because Plaintiff questions the authenticity of the agreement, the Service Agreement may not be reviewed by the Court in evaluating Meenan's Motion to Dismiss. As a result, Meenan's contract-based defenses will not be reached at this time.

Our Court of Appeals has instructed that a district court is generally confined to "the complaint, exhibits attached to the complaint, and matters of public record" when evaluating a challenge under Rule 12(b)(6). Estate of Roman v. City of Newark, 914 F.3d 789, 796 (3d Cir. 2019) (internal quotation marks and citation omitted); see also In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) ("As a general matter, a district court ruling on a motion to dismiss may not consider matters extraneous to the pleadings."). The Third Circuit has noted that a district court may also review "documents that a defendant attaches as an exhibit to a motion to dismiss," but only if the documents "are undisputedly authentic and the plaintiff's claims are based on them." Estate...