United States District Court, E.D. North Carolina, Southern Division
W. FLANAGAN, UNITED STATES DISTRICT JUDGE.
matter is before the court on defendant's partial motion
to dismiss for failure to state a claim upon which relief may
be granted, directed towards plaintiff's claims sounding
in tort, pursuant to Federal Rule of Civil Procedure
12(b)(6). (DE 13). The issues raised have been fully briefed,
and in this posture are ripe for ruling. For the reasons that
follow, defendant's motion to dismiss is granted in part
and denied in part.
OF THE CASE
a North Carolina corporation, commenced this action on
October 12, 2018, by filing complaint in the General Court of
Justice for New Hanover County, asserting a myriad of tort
and contract-based claims. Plaintiff's contract claims
include breach of express warranties, breach of implied
warranties, and breach of contract claims. The tort-based
claims which are the subject of the instant motion include
claims for negligence, negligent misrepresentation,
fraudulent concealment, and unfair and deceptive trade
practices pursuant to North Carolina General Statute §
75-1.1 (“UDTP”). Plaintiff seeks compensatory and
punitive damages as well as treble damages pursuant to
plaintiff's UDTP claim. On November 15, 2018, defendant,
an Indiana corporation, removed the action to this court, and
on December 21, 2018, defendant filed the instant motion,
seeking dismissal with prejudice of plaintiff's tort
claims, as barred by North Carolina's economic loss rule.
facts in the complaint may be summarized as follows.
specializes in the supply of hydraulic cylinders to global
equipment manufacturers. Over the last several years, one of
plaintiff's biggest customers has been JCB, a
multinational construction equipment manufacturer. Plaintiff
provides cylinders for use in JCB's machines.
relies on specialty experts in friction welding to machine
the cylinders it supplies to JCB from rods and eyes plaintiff
supplies. Plaintiff contracts with outside firms to friction
weld the rods and eyes together.
Defendant Agrees to Develop Small Platform
around May 5, 2013, plaintiff's vice president of supply
chain management, Pete Meriam (“Meriam”),
contacted defendant through defendant's website
expressing interest in having defendant perform friction
welding for plaintiff. Defendant's website states
defendant offers “friction welding for any application,
” and at all relevant times, defendant was a merchant
of friction weldments. (Compl. (DE 1-1) ¶ 8).
business development manager Kenn Frank (“Frank”)
responded via email on August 22, 2013. Frank told Meriam
that to have “an informed answer” to Meriam's
question, Frank would need drawings of the parts plaintiff
was considering for friction welding, including the material
specifications, to which Frank responded, “[f]rom these
pieces of information, we will be able to provide advice on
the best suited welding technology, ” also stating
“we will be able to provide a product quality and
consistency needed for your application.” (Id.
August 23, 2013, Meriam sent Frank drawings for the rod
assembly. This assembly featured a rod with a 45 millimeter
diameter, also known as the “small platform”
assembly. The drawings specified the materials for both the
rod and the eye for the small platform assembly. The rod was
to be made of a medium-carbon steel, AISI 1045 steel, while
the eye was either to be made of a low-carbon steel, AISI
1018 steel, or AISI 1045 steel.
on these drawings, defendant sent a proposal to plaintiff on
September 9, 2013, for development of the small platform
weldments to be used in the small platform assembly.
Defendant offered to take sample sets of rods and eyes for
“process development and optimization.”
(Id. ¶12). Attached to defendant's proposal
was a document titled “Terms and Conditions, ”
wherein defendant disclaimed any warranty, express or
implied, including implied warranties of merchantability or
fitness for a particular purpose, and which included
limitation to defendant's liability for failures of its
September 17, 2013, Meriam contacted Frank via email and
requested additional information about the testing defendant
would perform on the weldments. Frank responded on September
18, 2013, stating “our weld development process does
testing, including weld evaluation, sectioning and bend
testing.” (Id. ¶ 13).
October 3, 2013, plaintiff issued a purchase order
(“October 3, 2013 PO”) for the development of the
small platform weldments. Under the section, “TERMS,
” plaintiff stated as follows: “PRECISION
HYDRAULIC CYLINDERS, INC. TERMS AND CONDITIONS APPLY.”
(Id. ¶ 14). At the time, plaintiff's terms
and conditions provided in relevant part as follows:
Buyer's acceptance of delivery of products manufactured
hereunder shall not relieve Seller of any of its warranty or
other obligations hereunder. Payment shall not constitute
Seller warrants that all products, materials or work covered
by this order will conform to the specifications, drawings,
samples, or other description furnished or adopted by Buyer,
and will be of good material and workmanship and free from
defects. If not ordered to Buyer's design Seller further
warrants that they will be merchantable and fit for the
purpose intended. Seller will indemnify and save Buyer
harmless from any loss, actions, expense, claims, liabilities
or damages, including consequential damages incurred as a
result of Seller's failure to furnish products, materials
or work as warranted.
THIS PURCHASE ORDER SHALL BE A BINDING CONTRACT ACCORDING TO
ITS TERMS UPON ACCEPTANCE EITHER BY SELLER'S
ACKNOWLEDGMENT OR BY DELIVERY TO BUYER OF ALL OR PART OF
THE ORDER. NO ADDITIONAL OR DIFFERENT TERMS OFFERED BY THE
SELLER SHALL BE OR BECOME PART OF THIS ORDER NOR SHALL THIS
ORDER BE MODIFIED WITHOUT BUYER'S PRIOR EXPRESS WRITTEN
APPROVAL. Any waiver of strict compliance with any provision
hereof shall not be deemed to constitute a waiver of that or
any other provision in the future. THIS CONTRACT CONSTITUTES
THE ENTIRE AGREEMENT OF THE PARTIES AND THERE ARE NO TERMS OR
CONDITIONS OTHER THAN THOSE SPECIFICALLY SET FORTH OR
REFERRED TO HEREIN.
(Id. ¶ 15).
the October 3, 2013 PO, plaintiff also sent its supplier
quality requirements, which provide, under the “Quality
Guarantee” Section, the following regarding
“General Purchase Conditions”: “Vendor
warrants that all products, materials or services covered by
an order will conform to specifications and that production
is to latest revision drawings and specified engineering
tolerances or other description furnished by us and will be
free from defects in material and workmanship.”
(Id. ¶ 16).
alleges that defendant did not reject or counter
plaintiff's terms and conditions or supplier quality
requirements and accepted both by performing pursuant to the
October 3, 2013 PO.
Defendant Agrees to Develop Large Platform Weldments
October 8, 2013, Meriam emailed Frank to request a quote from
defendant to develop new rod weldments. The rods on these
assemblies had diameters of 50, 60, and 65 millimeters, also
known as the “large platform” assemblies. Meriam
attached to his email to Frank the drawings for the large
platform assemblies, including the drawings for large
platform weldments to be used in the large platform
assemblies with part nos. 3116205 and 3116226.
December 13, 2013, defendant submitted a proposal to
plaintiff to “develop and optimize” the large
platform weldments whose materials were specified in the
drawings Meriam sent Frank on October 8, 2013. (Id.
¶ 22). Specifically, defendant offered to “develop
and optimize weld parameters for each rod diameter-to-eye
combination” specified, including for weldment Nos.