United States District Court, D. Arizona
HONORABLE STEVEN P. LOGAN UNITED STATES DISTRICT JUDGE.
the Court is Norcold Incorporated, Thetford Corporation, and
Dyson-Kissner-Moran Corporation (together, the
“Defendants”) Motion to Dismiss Fraudulent
Concealment Claim and to Dismiss Complaint Pursuant to Rule
8, or Alternatively, Motion to Strike (the
“Motion”). (Doc. 5) The Motion was fully briefed
on November 27, 2018. (Docs. 12, 14) The Court's ruling
is as follows.
about September 4, 2010, Suzanne and Jerry Hale (together,
the “Plaintiffs”) purchased from a third party a
recreational vehicle (“RV”) that came equipped
with a Norcold 1200 gas absorption refrigerator
(“Refrigerator”). (Doc. 1-3 at 41-42) Norcold
Incorporated (“Norcold”) is a corporation whose
stock is owned entirely by Thetford Corporation
(“Thetford”) and Dyson-Kissner-Moran Corporation
(“DKM”). (Doc 1-3 at 5) The Refrigerator in the
Plaintiffs' RV was manufactured by the Defendants on
February 12, 2006, and installed in the RV thereafter. (Doc.
1-3 at 41-42)
morning of September 29, 2016, Plaintiffs' RV was parked
in Dewey, Arizona with neither Plaintiff inside. (Doc. 1-3 at
42) Shortly after 9:30 a.m., Jerry Hale saw the RV on fire
with flames coming from the top refrigerator vent on the
roof. (Doc. 1-3 at 42) The fire destroyed the RV and most of
Plaintiffs' personal property. (Doc. 1-3 at 42) On
January 20, 2017, an inspection of the RV revealed burn
patterns on the Refrigerator consistent with the fire
originating from a leak in the Refrigerator's boiler
tube. (Doc. 1-3 at 45) The results of another inspection on
July 26-28, 2017, were consistent with the fire having been
caused by defective boiler tube design and a corrosion defect
in the Refrigerator. (Doc. 1-3 at 46-47) Since at least 1997,
the Defendants have designed, manufactured, and sold gas
absorption refrigerators such as the one in the
Plaintiffs' RV. (Doc. 1-3 at 11) The Plaintiffs allege
that the Defendants concealed and misrepresented defects in
their refrigerators to customers and federal regulators in a
variety of ways between 1999 and 2012. (Doc. 1-3 at 26-39)
16, 2018, the Plaintiffs filed a complaint (the
“Complaint”) (Doc. 1-3) in Maricopa County
Superior Court with claims against the Defendants for strict
liability due to design defect, strict liability due to
failure to warn, negligence, negligence due to post-sale duty
to warn, negligence per se, negligence due to post-sale duty
to conduct adequate recall/retrofit, and fraudulent
concealment. (Doc. 1-2 at 1; Doc. 1-3 at 56-66) On October
30, 2018, the Defendants removed the case to this Court based
on diversity jurisdiction. (Doc. 1-1 at 1) On November 5,
2018, the Defendants filed the Motion seeking to dismiss the
Complaint pursuant to Federal Rules of Civil Procedure
12(b)(6), 9(b), 8, and 12(f). (Doc. 5 at 1)
survive a FRCP 12(b)(6) motion to dismiss, a complaint must
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief” such
that the defendant is given “fair notice of what the .
. . claim is and the grounds upon which it rests.”
Bell Atl. Corp. v. Twombly, 550 U.S. 554, 555 (2007)
(quoting Fed.R.Civ.P. 8(a)(2); Conley v. Gibson, 355
U.S. 41, 47 (1957)). The Court may dismiss a complaint for
failure to state a claim under FRCP 12(b)(6) for two reasons:
(1) lack of a cognizable legal theory, and (2) insufficient
facts alleged under a cognizable legal theory. Balistreri
v. Pacificia Police Dep't, 901 F.2d 696, 699 (9th
deciding a motion to dismiss, the Court must “accept as
true all well-pleaded allegations of material fact, and
construe them in the light most favorable to the non-moving
party.” Daniels-Hall v. Nat'l Educ.
Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). In
comparison, “allegations that are merely conclusory,
unwarranted deductions of fact, or unreasonable
inferences” are not entitled to the assumption of
truth, and “are insufficient to defeat a motion to
dismiss for failure to state a claim.” Id.;
In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th
Cir. 2010). A plaintiff need not prove the case on the
pleadings to survive a motion to dismiss. OSU Student
All. v. Ray, 699 F.3d 1053, 1078 (9th Cir. 2012).
Dismissal of Fraudulent Concealment Claim Under FRCP
motion to dismiss a complaint or claim “grounded in
fraud” under FRCP 9(b) for failure to plead with
particularity is the functional equivalent of a motion to
dismiss under FRCP 12(b)(6) for failure to state a claim.
Blue Cross of California Inc. v. Insys Therapeutics
Inc., 2019 WL 2099945, at 7 (D. Ariz. May 14, 2019)
(citing Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097,
1107 (9th Cir. 2003)). Under FRCP 9(b), a claim alleging
fraud must “state with particularity the circumstances
constituting fraud. . . .” Fed.R.Civ.P. 9(b).
“[A]llegations of fraud must be ‘specific enough
to give defendants notice of the particular misconduct . . .
so that they can defend against the charge and not just deny
that they have done anything wrong.'” Bly-Magee
v. California, 236 F.3d 1014, 1019 (9th Cir. 2001)
(quoting Neubronner v. Milken, 6 F.3d 666, 672 (9th
Cir. 1993)). An allegation of fraud must be accompanied by
“the who, what, when, where, and how” of the
misconduct charged. Vess, 317 F.3d at 1106 (quoting
Cooper v. Pickett, 137 F.3d 616, 627 (9th
Cir.1997)). When a claim within a complaint is grounded in
fraud and the claimant fails to meet the FRCP 9(b) standard
for that claim, the claim may be dismissed. Vess,
317 F.3d at 1107.
Defendants argue that the Plaintiffs have failed to meet the
FRCP 9(b) standard for their fraudulent concealment claim.
(Doc. 5 at 2-4) Under Arizona law, a fraudulent concealment
claim transpires when “[o]ne party to a transaction who
by concealment or other action intentionally prevents the
other from acquiring material information is subject to the
same liability to the other, for pecuniary loss as though he
had stated the nonexistence of the matter that the other was
thus prevented from discovering.” Wells Fargo Bank
v. Ariz. Laborers, Teamsters & Cement Masons Local No.
395 Pension Tr. Fund, 38 P.3d 12, 34 (Ariz. 2002)
(quoting Restatement (Second) of Torts § 550 (1976)).
Under this definition, it is clear that the Plaintiffs'
claim should immediately fail because the Plaintiffs and the
Defendants were never parties to the same transaction;
rather, the Plaintiffs bought their RV from a third party
with the Refrigerator made by the Defendants already
installed. (Doc. 1-3 at 41-42); see also Sullivan v.
Pulte Home Corp., 290 P.3d 446, 454-55 (Ariz.Ct.App.
2012) (affirming dismissal of a fraudulent concealment claim
by a subsequent home buyer against the original builder
because “being a party to a transaction is a necessary
element of a fraudulent concealment claim”), vacated in
part on other grounds, 306 P.3d 1 (Ariz. 2013).
District of Arizona has also consistently applied the
fraudulent concealment elements stated in Coleman v.
Watts, 87 F.Supp.2d 944 (D. Ariz. 1998)-which does not
include a transactional requirement. Both the Wells
Fargo and Coleman cases involved common law
fraudulent concealment claims in Arizona. However, since the
Court is hearing this case on diversity jurisdiction and
thereby applying state law, decisions of the Arizona Supreme
Court-such as Wells Fargo-are more authoritative
than the case law of this District-such as Coleman.
See Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938).
In addition, Coleman is older case law than
Wells Fargo and borrowed its elements for fraudulent
concealment from a much older case in Colorado.
Coleman, 87 F.Supp.2d at 951 (citing Morrison v.
Goodspeed, 68 P.2d 458 ...