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ITW Charlotte, LLC v. ITW Commercial Construction

United States District Court, W.D. North Carolina, Charlotte Division

December 21, 2017



          Frank D. Whitney Chief United States District Judge.

         THIS MATTER is before the Court on Defendant's Motion for Reconsideration (Doc. No. 23). Defendant contends that this Court erred in denying Defendant's motion to dismiss Plaintiffs' claim for tortious interference with contract. In particular, Defendant requests reconsideration of the Court's denial of Defendant's economic loss doctrine argument. For the reasons stated herein, the Court determines that the economic loss doctrine does not bar Plaintiffs' claim for tortious interference with contract. Accordingly, Defendant's Motion for Reconsideration (Doc. No. 23) is DENIED.

         I. BACKGROUND

         Plaintiffs' allegations of fact remain the same as those discussed in the Court's previous Order (Doc. No. 20). This action arises from the commercial lease entered into between Plaintiffs ITW Charlotte, LLC, Once, LLC, and Burlingame Investment Holdings, LLC (collectively “Landlord”) and Defendant, ITW Commercial Construction, North America (“CCNA”). In April of 2016, Landlord and CCNA entered into a lease agreement (the “Lease”) for a commercial building (the “Building”) located at 2027 Gateway Boulevard, Charlotte, NC. (Doc. No. 1-1, p. 1). This dispute arose after the fire suppression system (“FSS”) located in the Building was found to be inadequate for CCNA to conduct its operations without modification.

         Landlord alleges that prior to the execution of the Lease, CCNA conducted an inspection of the Building to determine if it was satisfactory for its intended use. Id. at 2. Landlord alleges that during the inspection CCNA had the opportunity to observe the FSS and issued no objection to its condition. Id. CCNA admits that it was permitted to view certain visible portions of the FSS but alleges that some of the defects in the sprinkler system were not reasonably discoverable during the initial inspection. Id. at 65. After entering into the Lease, CCNA determined that the FSS was insufficient for its use of the Building. Id. at 2. CCNA then sent a letter to Landlord requesting permission to make modifications to the FSS. Id. Upon receiving Landlord's approval, CCNA then paid to have the proposed alterations performed. Id. at 3.

         On April 27, 2017, CCNA sent a letter (the “Default Notice”) to Landlord, asserting that Landlord had breached Section 15.02 of the Lease by failing to pay for the modifications to the FSS. Id. Landlord rejected CCNA's demand, arguing that it was not obligated to pay for these modifications under the Lease and therefore no default existed. Id.

         On May 13, 2017, Landlord entered in a sale agreement with a third-party. Id. at 4. This sale agreement was conditioned upon obtaining a valid Estoppel Certificate from CCNA, indicating that no defaults under the Lease existed. Id. On May 23, 2017, CCNA received an Estoppel Certificate from Landlord. Id. at 67. CCNA timely executed the Estoppel Certificate, including in it a disclosure that Landlord was in default of the Lease. Id. As a result, Landlord was unable to complete the conveyance of the property to the buyer. Id. at 4.

         Both parties contend that the other is responsible for the cost of the modifications to the FSS. Landlord filed this present action seeking a declaratory judgment and asserting a claim for tortious interference with contract for CCNA's alleged interference with Landlord's contract to sell the property. Id. CCNA has filed a counterclaim, also seeking a declaratory judgment and asserting a breach of contract claim for the Landlord's alleged breach of Section 12.02(B) of the Lease. On August 10, 2017, CCNA filed a Motion to Dismiss Landlord's tortious interference claim pursuant to Rule 12(b)(6). (Doc. No. 3).

         On October 20, 2017, this Court entered an Order denying Motion to Dismiss Plaintiffs' tortious interference with contract claim (Doc. No. 20). Defendant filed its Motion for Reconsideration (Doc. No. 23) on November 17, 2017, arguing that the Court erred in denying CCNA's economic loss doctrine argument.


         Defendant's Motion to Dismiss under Rule 12(b)(6) argues that Plaintiffs second cause of action fails to state any claim upon which relief can be granted. (Doc. No. 3, p. 1). In order to survive a 12(b)(6) motion to dismiss, a complaint must contain more than mere legal conclusions. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint must plead facts sufficient to “raise a right to relief above the speculative level” and to demonstrate that the claim is “plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). The claim is facially plausible when the factual content of the complaint allows the court to “draw the reasonable inference that the defendant is liable for the misconduct.” Id. at 556.

         In Iqbal, the Supreme Court articulated a two-step process for determining whether a complaint meets this plausibility standard. First, the court identifies allegations that, because they are no more than conclusions, are not entitled to the assumption of truth. Iqbal, 556 U.S. at 678. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555) (allegation that government officials adopted challenged policy “because of” its adverse effects on protected group was conclusory and not assumed to be true). Although the pleading requirements stated in “Rule 8 [of the Federal Rules of Civil Procedure] mark[ ] a notable and generous departure from the hyper-technical, code-pleading regime of a prior era . . . it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. at 678-79.

         Second, to the extent there are well-pleaded factual allegations, the court should assume their truth and then determine whether they plausibly give rise to an entitlement to relief. Id. at 679. “Determining whether a complaint contains sufficient facts to state a plausible claim for relief ‘will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'” Id. “Where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief, '” and therefore it should be dismissed. Id. (quoting Fed.R.Civ.P. 8(a)(2)). In other words, if after taking the complaint's well-pleaded factual allegations as true, a lawful alternative explanation appears a “more likely” cause of the complained of behavior, the claim for relief is not plausible. Id.

         III. ...

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