Marsulex Envtl. Techs. v. Selip S.P.A.

247 F.Supp.3d 504

MARSULEX ENVIRONMENTAL TECHNOLOGIES, Plaintiff,

v.SELIP S.P.A., Defendant.

CIVIL NO.: 1:15–CV–00269

United States District Court, M.D. Pennsylvania.

Signed March 27, 2017

Richard E. Coe, Christian E. Piccolo, Jennifer Burke Dempsey, Drinker Biddle & Reath LLP, Philadelphia, PA, for Plaintiff.

Matthew Shindell, Goldberg Segalla LLP, Philadelphia, PA, for Defendant.

MEMORANDUM

Susan E. Schwab, United States Chief Magistrate Judge

I. Introduction.

Plaintiff Marsulex Environmental Technologies ("MET"), a Delaware Corporation with its principal place of business in Lebanon, Pennsylvania, brings this diversity action for strict liability, breach of contract, breach of express and implied warranties, and unjust enrichment against Defendant Selip S.P.A. ("Selip"), an Italian corporation with its principal place of business in Fontanellato (Parma), Italy. MET, who is now proceeding via an amended complaint, maintains that Selip deficiently designed and manufactured piping that was supplied to one of MET's customers in Poland. Before the Court is Selip's motion to dismiss the entire amended complaint on the basis that a provision in the parties' agreement precludes MET from raising the claims therein.¹ In the alternative, Selip moves to dismiss Count I of the amended complaint, a strict liability claim, on the basis that it is barred by Pennsylvania's economic loss doctrine. For the reasons set forth below, Selip's motion will be granted in part and denied in part.

II. Background and Procedural History.

On February 6, 2015, MET filed an original complaint (doc. 1 ) against Selip, alleging that Selip deficiently designed and manufactured piping that was supplied to one of MET's customers in Poland. In lieu of an answer, Selip filed a motion (doc. 6 ) to dismiss MET's original complaint under the doctrine of forum non conveniens , insisting that this action could not proceed fairly in the Middle District of Pennsylvania, and that instead, it should be litigated in Poland. In the alternative, Selip moved under Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss Count I, alleging strict liability. Selip argued, among other things, that Count I was barred by Pennsylvania's economic loss doctrine.

On March 18, 2016, the Court ruled on Selip's motion to dismiss. See docs. 28 , 29. The motion was denied under the doctrine of forum non conveniens , but granted under Rule 12(b)(6) to dismiss Count I pursuant to Pennsylvania's economic loss doctrine. Having so ruled, the Court instructed MET to file an amended complaint. MET filed that amended complaint (doc. 33 ) on April 15, 2016, raising (as it did before) claims of strict liability, breach of contract, breach of express warranty, breach of implied warranty, and unjust enrichment due to Selip's allegedly deficient design and manufacturing of the piping that was supplied to MET's customer in Poland.

Since the filing of the amended complaint, Selip has filed its second motion (doc. 42 ) to dismiss. This time, Selip moves for dismissal of the entire amended complaint on the basis of a provision in the parties' Contract. In the alternative, however, Selip moves for dismissal of Count I in the amended complaint, a strict liability claim. Selip, who also moved for dismissal of Count I in its first motion to dismiss, resurrects its argument here and maintains that MET's strict liability claim is barred by Pennsylvania's economic loss doctrine.

III. The Amended Complaint.

In order to once again evaluate the adequacy of MET's pleadings, we briefly state the facts, as set forth in the amended complaint, as follows:²

On or about January 22, 2010, MET, a company which provides air quality control systems to minimize the emission of air pollutants, entered into an engineering and procurement agreement with Zaklady Azotowe "Pulway" S.A. (hereinafter, "ZAP"), a chemical company in Poland, which specializes in the manufacturing of fertilizer. Doc. 33 at ¶¶ 8, 9. This agreement, in part, required MET to oversee the design and purchase of goods for the construction of a Flue Gas Desulfurization Unit ("FGD Unit" or "Unit") at ZAP's chemical plant in Poland. Id. at ¶ 10. According to MET, the environment inside an FGD Unit is highly corrosive, and based on past experience, MET determined that the FGD Unit required "External Fiberglass Reinforced Plastic Piping" ("FRP piping" or "piping").³ Id. at ¶¶ 1, 11.

On or about June 21, 2010, MET entered into a Contract with Selip, under which Selip agreed to design, manufacture, and supply FRP piping for the construction of the FGD Unit at ZAP's chemical plant.⁴ Id. at ¶ 12. This Contract required Selip to, among other things, fabricate the FRP piping in accordance with Selip's recommended procedures and all approved drawings. Id. at ¶ 14. This Contract further required the inner and outer surfaces of the FRP piping to be "free of cracks." Id. at ¶ 15 (quoting doc. 33–1 at 9, ¶ 4.4). In addition, Selip warranted that the contracted-for equipment would be "properly and professionally constructed;" it would "meet the technical requirements of the Purchase Order[,] including the standards and regulations [,] as well as the best engineering practices;" and it would be "new and unused, of the specified material, free of defects, and fit for the application specified." Id. at ¶ 16 (quoting doc. 33–2 at 3, ¶ 5). Selip further warranted that the FRP piping would be "of merchantable quality, free from all defects in design, workmanship and materials, and ... fit for the particular purposes for which they [were] purchased," and finally, "provided in strict accordance with the specification, samples, drawings, designs or other requirements (including performance specification) approved or adopted by [MET]." Id. at ¶ 17 (quoting doc. 33–3 at 4, ¶ 10 (b)).

On or about February 3, 2011, Selip delivered the FRP piping to ZAP's plant, and in October of 2012, the plant began operating. Id. at ¶¶ 18, 19. Only a few months later in January of 2013, Selip was notified that there were cracks in the FRP piping. Id. at ¶ 20. Selip, after examining the FRP piping at ZAP's plant, acknowledged the cracks, but deemed the cracks "superficial" and filled them with resin. Id. According to MET, these cracks were an early warning sign that Selip's FRP piping was defective, and as was later revealed, Selip's hasty repair failed to correct the underlying problems. Id.

On or about September 16, 2013, Selip was notified that new cracks were forming in the FRP piping. Id. at ¶ 21. According to MET, the continued cracking demonstrated that the problems with the piping were significant, and further, that the piping was continuing to deteriorate. Id. Selip, on or about April 8, 2014, went to ZAP's plant, examined the cracking in the FRP piping, acknowledged—once again—that there were cracks in the piping, and avowed that it would provide support and assistance to repair the cracks. Id. at ¶ 22. According to the amended complaint, Selip, contrary to the parties' "agreement," specified that all costs for its assistance to repair its defective piping would be charged to either MET or ZAP. Id.

On or about May 31, 2014, there was a serious malfunction on the FGD Unit caused by the failure of the FRP Piping. Id. at ¶ 23. ZAP, on June 2, 2014, informed MET of this failure, and MET, on the same day, informed Selip of the same. Id. The following day, MET sent Selip photographs of the failed FRP piping and resulting damage at ZAP's plant. Id. at ¶ 24. According to MET, the photographs illustrate that the FRP piping essentially exploded and tore apart, causing structural damage to ZAP's pumping station facility, which housed the FGD Unit and key components of the FGD Unit other than the FRP piping itself, such as the agitator, expansion joints, and flanges. Id. Thereafter, MET informed Selip of ZAP's understanding that the failure was caused by a deficiency in Selip's design and manufacturing of the FRP piping, and MET requested that Selip dispatch someone to ZAP's plant in order to examine the piping and make a determination as to why it failed. Id. at ¶ 25. According to MET, however, Selip refused to send someone. Id. at ¶ 26.

As a result of the failed FRP piping, ZAP's plant was completely shut down for approximately three months. Id. at ¶ 27. In addition, MET was required to repair the FGD Unit in order to comply with guarantees and performance obligations in its agreements with ZAP. Id. at ¶ 28. More specifically, MET was under warranty for all key equipment used in the FGD Unit. Id. And, in order to repair the Unit, MET was forced to replace, at its own expense, the failed FRP piping with a product from another manufacturer. Id. at ¶ 29. MET was also forced to replace other various key components of the FGD Unit, also at its own expense, including the agitator, expansion joints, and flanges. Id.

In addition, MET hired a third-party expert (the "Expert") to investigate Selip's failed FRP piping. Id. at ¶ 30. The Expert evaluated cross-sections from samples of the piping, as well as the piping's construction via "visual inspection and a modified loss on ignition test—also referred to as a burn test." Id. at ¶ 31. The Expert concluded that the FRP piping supplied by Selip was poorly constructed because Selip used low strength reinforcement and non-structural components in the flange area of the piping. Id. at ¶ 32. The Expert further concluded that the flanges in the piping did not meet Selip's design and fabrication requirements. Id. In particular, the Expert's tests revealed that the woven roving layers that were required by Selip's working procedures were not used in the flange section of the FRP piping, thus resulting in weak piping, which could not handle the stress that it was intended to handle. Id. at ¶ 33. The Expert's tests also revealed that the FRP piping included "flange areas that had joints and were not made essentially from one piece as depicted in Selip's drawings and...