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ExxonMobil Oil Corp. v. Amex Construction Co.

May 23, 2008

EXXONMOBIL OIL CORPORATION, PLAINTIFF,
v.
AMEX CONSTRUCTION COMPANY, INCORPORATED, DEFENDANT.



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Plaintiff ExxonMobil Oil Corporation ("Exxon") brought suit against Amex Construction Company, Incorporated ("Amex") under this Court's diversity jurisdiction alleging breach of warranty and negligence. Soon thereafter, Exxon filed a First Amended Complaint. Amex brought a Motion to Dismiss Exxon's First Amended Complaint, and rather than responding, Exxon filed a Second Amended Complaint. Amex then brought a Motion to Dismiss Exxon's Second Amended Complaint. For the reasons stated below, the Motion to Dismiss Exxon's Second Amended Complaint is denied and the previous motion is dismissed as moot.

STATEMENT OF FACTS

On or about May 26, 2003, Exxon entered into a Continuing Services Agreement ("CSA") with Amex. Sec. Amend. Cmplt. at ¶ 5. The CSA operated as a master contract covering all work, service, and materials provided to Exxon by Amex. Id. at ¶ 6. The CSA included certain warranties, representations and guarantees as to the quality, workmanship, and fitness for a particular purpose of the services and materials provided by Amex. Id. at ¶ 22.

Pursuant to the CSA, on March 5, 2004, Amex submitted a proposal to Exxon for the installation of a High Density Polyethylene ("HDPE") pipe to be used for water cooling at Exxon's Joliet Refinery. Id. at ¶ 7. On September 30, 2004, Exxon accepted Amex's proposal and placed a service order for the installation of the HDPE pipe and related services. Id. at ¶ 9. Amex began work on the installation of the HDPE pipe in November of 2004. Id. at ¶ 10. On or about June 2, 2005, Amex completed the installation and Exxon accepted the work and put the pipe into service. Id. at ¶ 11.

On July 30, 2005, approximately eight weeks after the final installation, a weld holding a thirty-six inch section of the HDPE pipe failed, causing the pipe to decouple. Id. at ¶ 12. Because of the failure of the HDPE pipe, the refinery's cooling system lost its water circulation, resulting in an emergency shutdown of various crude production and refining units, a shutdown of the gas turbine generator, and a slowdown of crude production and refining in other units of the refinery. Id. at ¶ 13.

The pipe failure also caused other property to be destroyed. Id. at ¶ 14. Approximately $900,000 in crude and hydrocarbons in various stages of production were burned during the emergency shutdown process and subsequent start-up process. Id. Various heat exchangers, pump seals, and other mechanical devices were also damaged. Id. at ¶ 15. Exxon states that the HDPE pipe failed because Amex failed to use reasonable care in its installation and its selection of materials. Id. at ¶ 27.

STANDARD

When considering Amex's motion to dismiss under Rule 12(b)(6), this Court accepts as true all facts alleged in the Second Amended Complaint and construes all reasonable inferences in favor of Exxon. See Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). To state a claim upon which relief can be granted, a "short and plain statement of the claim showing that the pleader is entitled to relief" is all that is required. Fed. R. Civ. P. 8(a)(2). A plaintiff need not allege all facts involved in the claim. See Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994). However, in order to survive a motion to dismiss for failure to state a claim, the claim must be supported by facts that, if taken as true, at least plausibly suggest that the plaintiff is entitled to relief. See Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1974 (2007). Such a set of facts must "raise a reasonable expectation that discovery will reveal evidence" of illegality. Id. at 1965.

DISCUSSION

Breach of Warranty

Amex argues that Exxon has not adequately stated a claim for breach of warranty. First, it notes that the warranty provision in the CSA becomes effective only after Exxon accepts a given piece of work. As such, Amex argues that Exxon's statement in its Second Amended Complaint that it accepted the HDPE pipe installation "on or about June 5, 2005" is inadequate because it remains unclear whether Exxon accepted the work before the incident on July 30, 2005 and thus it remains unclear whether the warranty provision applied.

In order to survive a motion to dismiss for failure to state a claim, the claim must be supported by facts that, if taken as true, at least plausibly suggest that the plaintiff is entitled to relief. See, Twombly, 127 S.Ct. 1974. The complaint must "give the defendant fair notice of what the.... claim is and the grounds upon which it rests." Id. at 1964. No heightened pleading standard applies to breach of warranty claims.

Exxon states in its Second Amended Complaint that it accepted Amex's work on or about June 5, 2005. That is, it accepted the work before the July 30, 2005 incident. This is sufficient to state a claim for breach of warranty. If evidence comes forth during discovery indicating that Exxon did not accept the ...


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