United States District Court, D. Arizona
A. TEILBORG SENIOR UNITED STATES DISTRICT JUDGE.
before the Court is Defendant Forged Metals
Incorporated's (“Forged Metals”) Motion to
Dismiss two of Plaintiff Honeywell International
Incorporated's (“Honeywell”) claims pursuant
to Federal Rule of Civil Procedure 12(b)(6) for failure to
state a claim upon which relief can be granted. (Doc. 13). On
September 9, 2019, Honeywell filed its Response to Forged
Metals' Motion to Dismiss. (Doc. 18). On September 16,
2019, Forged Metals replied. (Doc. 19). The Court now rules
on the Motion.
following facts are either undisputed or recounted in the
light most favorable to the non-moving party. See Wyler
Summit P'ship v. Turner Broad. Sys., Inc., 135 F.3d
658, 661 (9th Cir. 1998). In 2014, Honeywell ordered forgings
from Forged Metals for a “T55” test compressor.
(Doc. 1 at 1-2). Honeywell alleges that it provided Forged
Metals with engineering drawings that instructed it to apply
a particular heat treatment to the forgings. (Id. at
2). According to Honeywell, Forged Metals later asserted that
it created the forgings in accordance with the drawings.
(Id.). On June 9, 2017, Honeywell tested the
compressor with the forgings supplied by Forged Metals.
(Id. at 3). In the process, Honeywell claims the
growth compressor rig failed and damaged the attached
equipment. (Id.). Honeywell asserts that Forged
Metals caused this failure because it did not adequately
strengthen the forgings with the appropriate heat treatment
as instructed by Honeywell's drawings. (Id.).
Honeywell now seeks damages and alleges breach of contract,
breach of express warranty, breach of implied warranty, and,
at issue here, two tort claims: one for “falsely
certif[ying] that the forgings complied with Honeywell's
specifications” and the other for “negligen[ce]
in misreading the specifications provided by Honeywell . . .
[and for] providing forgings that were not appropriate for
their intended use.” (Id. at 3-6). Forged
Metals moves to dismiss those claims under the economic loss
doctrine or, alternatively, it moves to dismiss the negligent
misrepresentation claim for failure to state a plausible
cause of action. (Doc. 13 at 1).
defendant may move to dismiss a complaint for “failure
to state a claim upon which relief can be granted.”
Fed.R.Civ.P. 12(b)(6). Dismissal for failure to state a claim
“is proper only where there is no cognizable legal
theory or an absence of sufficient facts alleged to support a
cognizable legal theory.” Davidson v.
Kimberly-Clark Corp., 889 F.3d 956, 965 (9th Cir.),
cert. denied, 139 S.Ct. 640 (2018). “[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 (2009)
(citation omitted). All facts are read in the light most
favorable to the non-moving party. See Shwarz v. United
States, 234 F.3d 428, 435 (9th Cir. 2000).
Choice of Law Dispute
parties debate whether the General Purchase Order Provision
that requires New York law to govern “[t]he
construction, interpretation and performance” of the
agreement and “all transactions” under the
agreement, (Doc. 19-1 at 21 (§ 30.1)), also applies to
Honeywell's tort claims. Forged Metals argues that this
choice of law provision applies to Honeywell's tort
claims because these claims “depend on interpretation
of the parties' contract.” (Doc. 13 at 7).
Honeywell responds that resolution of its tort claims does
not depend on “interpretation of a traditional
contract, ” and thus the choice of law provision does
not apply. (Doc. 18 at 2-3).
arising in tort are not ordinarily controlled by a
contractual choice of law provision . . . [but] are decided
according to the law of the forum state.” Winsor v.
Glasswerks PHX, L.L.C., 63 P.3d 1040, 1043 ¶ 9
(Ariz.Ct.App. 2003) (quoting Sutter Home Winery, Inc. v.
Vintage Selections, Ltd., 971 F.2d 401, 407 (9th Cir.
1992)); see also Patton v. Cox, 276 F.3d 493, 495
(9th Cir. 2002) (“When a federal court sits in
diversity, it must look to the forum state's choice of
law rules to determine the controlling substantive
law.”). However, under Arizona law, “contractual
choice of law provisions may apply to tort claims [when] . .
. ‘resolution of th[ose] claims relates to
interpretation of the contract.'” Winsor,
63 P.3d at 1044 ¶ 10 (quoting Manetti-Farrow, Inc.
v. Gucci Am., Inc., 858 F.2d 509, 514 (9th Cir. 1988)).
In such a case, the tort claims cannot “be adjudicated
without analyzing whether the parties were in compliance with
the contract.” Id. (quoting
Manetti-Farrow, Inc., 858 F.2d at 514).
tort claims rely on contract interpretation, and thus, New
York law applies pursuant to the parties' contract.
Honeywell states in its Complaint that “[t]he purchase
orders for the forgings incorporate [the] General Purchase
Order Provisions (‘GPOPs') by reference.”
(Doc. 1 at 2). And the General Purchase Order Provisions
explicitly define a purchase order as “an order issued
by Honeywell for the purchase of Goods, together with the
specifications, drawings, terms and conditions, or other
documents referred to, attached to, or incorporated by
reference on the face of [the] Purchase Order.”
(Doc. 19-1 at 2 (§ 1) (emphasis added)). Moreover,
Honeywell alleges that “[e]ach purchase order
incorporated the drawing for that forging.” (Doc. 1 at
4). In fact, this allegation is the basis of its breach of
contract cause of action. (See id.). Based on
Honeywell's allegations, solely for purposes of deciding
Forged Metals' Motion to Dismiss (Doc. 13), the Court
concludes that certain specifications relating to heat
treatment were incorporated into the parties' contract.
the allegations in the Complaint indicate that the basis of
Honeywell's tort claims depends on contract
interpretation. Honeywell alleges, for purposes of its
negligent misrepresentation tort claim, that “Forged
Metals falsely certified that the forgings complied with
Honeywell's specifications.” (Doc. 1 at 6).
Honeywell alleges, for purposes of its negligence tort claim,
that “Forged Metals was negligent in misreading the
specifications provided by Honeywell.” (Id.).
Thus, based on Honeywell's allegations, its tort claims
cannot be resolved without deciphering what the
contract's specifications required of Forged Metals. In
fact, it appears Honeywell does not dispute that the drawings
and specifications were incorporated into the parties'
contract, but rather Honeywell claims that interpretation of
what the drawings and specifications require is not
“traditional” contract interpretation, and thus
the contract's choice of law provision does not apply.
(Doc. 18 at 2-3). Honeywell cites no authority for this
assertion, and the Court is not aware of any Arizona law that
draws a distinction based on the traditionality of
the required contract interpretation. Because Honeywell's
tort claims cannot “be adjudicated without analyzing
whether the parties were in compliance with the contract,
” the Court will enforce the parties' choice of law
provision, which requires the Court to apply New York law.
See Winsor, 63 P.3d at 1044 ¶ 10 (citation
Economic Loss Doctrine
Court must next decide whether, under New York law, Honeywell
seeks recovery in tort for economic harms already fully
recoverable by contract. Forged Metals argues that
Honeywell's tort claims are barred by the economic loss
doctrine because Honeywell's tort claims are based on a