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Lexington Insurance Co. v. Office Depot, Inc.

United States District Court, Seventh Circuit

May 6, 2013

Lexington Insurance Company et al.
v.
Office Depot, Inc. et al.

STATEMENT

HARRY D. LEINENWEBER, Magistrate Judge.

Before the Court is Defendant Office Depot, Inc.'s motion to dismiss. For the reasons that follow, the Court grants the motion.

I. FACTUAL BACKGROUND

This case involves a subrogation action which arises from a fire in the 25-story Bank of America, N.A. ("BOA") banking center located at 33 North Dearborn, in Chicago, Illinois. On March 6, 2011, an electrical counterfeit currency bill detector started a fire at BOA. The fire spread and caused significant damage to BOA and adjacent properties in the building. Plaintiffs Lexington Insurance Company, Arch Specialty Insurance, Hanover Insurance Company, Cincinnati Insurance Company, State Farm Fire & Casualty Company, Certain Underwriters at Lloyds of London and Certain London Market Insures, and American Family Insurance Group (collectively, "Plaintiffs") insured the building and various tenants against the loss at the time of the fire. Plaintiffs have reimbursed each of their insureds for their losses and now seek to recover amounts they paid their insureds in connection with the fire. They seek to be reimbursed from Defendants Hilton Trading Corporation d/b/a Accubanker USA, ("Accubanker"), Office Depot, Inc. ("Office Depot") and Bank of America, N.A. (collectively, "Defendants").

On December 14, 2012, Defendant Office Depot removed this case to Federal Court. Shortly after removing the case, it filed the instant motion, seeking to dismiss Plaintiffs' negligence (Count III) and strict liability (Count IV) claims.

II. LEGAL STANDARD

"A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). When considering a motion to dismiss under Rule 12(b)(6), the Court takes all well pleaded allegations of the complaint as true and views them in the light most favorable to the plaintiff. Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d 609, 622 (7th Cir. 2012). To satisfy the notice-pleading standard of Federal Rule of Civil Procedure 8, a complaint must provide a "short and plain statement of the claim showing that the pleader is entitled to relief, " and must provide the defendant with fair notice of the claim and its basis. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A claim has facial plausibility and survives dismissal when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Appert, 673 F.3d at 622.

III. DISCUSSION

A. Negligence (Count III)

Plaintiffs assert a negligence claim against Defendant Office Deport for its part in selling the defective electrical counterfeit currency bill detector. Office Depot contends Plaintiffs' negligence claim should be dismissed because Plaintiffs fail to allege Office Depot owed and breached a legal duty to Plaintiffs. Plaintiffs argue their complaint alleges Office Depot owed a duty to Plaintiffs because of its involvement in the design, manufacture, testing and inspecting of the electrical counterfeit currency bill detector.

"[I]n any negligence action, a plaintiff must establish the existence of a duty, a breach of that duty, an injury that was proximately caused by that breach, and damages." Jablonski v. Ford Motor Co., 955 N.E.2d 1138, 1153-54 (Ill. 2011). "The touchstone of this [C]ourt's duty analysis is to ask whether a plaintiff and a defendant stood in such a relationship to one another that the law imposed upon the defendant an obligation of reasonable conduct for the benefit of the plaintiff." Marshall v. Burger King, 856 N.E.2d 1048, 1057 (Ill. 2006). In determining whether a defendant owed a duty, the Court considers (1) likelihood of injury; (2) reasonable foreseeability of such injury; (3) the magnitude of the burden of guarding against the injury; and (4) consequences of placing that burden on defendant. Brewster v. Rush-Presbyterian-St. Luke's Med. Center, 836 N.E.2d 635, 637 (Ill.App.Ct. 2005).

In relevant part, Plaintiffs' complaint states, "Office Depot owed a duty to Plaintiffs to exercise reasonable skill and care in designing, constructing, manufacturing, testing, inspecting and selling the subject Accubanker D62 [the electrical counterfeit currency bill detector]." ECF No. 1-1 at § 70. Plaintiffs allege Office Deport breached this duty by, "[f]ailing to properly construct the subject Accubanker D62... failing to properly design the subject Accubanker D62, failing to properly warn of the dangerous condition that existed... failing to correct and/or remedy the unreasonable defects... failing to maintain proper process and quality control over the manufacture, assembly of completeness..." Id. at § 71.

Office Depot argues these allegations are insufficient because 1) it did not design or manufacture the electrical counterfeit currency bill detector; and because 2) the complaint fails to allege the electrical counterfeit bill detector was in a dangerous condition when it arrived at BOA or that Office Depot had knowledge of the said defects. The Court agrees.

Plaintiffs fail to allege facts that demonstrate Office Depot could foresee the injuries sustained by Plaintiffs, who were not purchasers, users, or foreseeable users of the electrical counterfeit currency bill detector. See e.g., Solis v. BASF Corp., No. 1-11-0875, 2012 WL 4748186 at *18 (Ill.App.Ct. Oct. 4, 2012) (finding the lower court properly instructed the jury that the distributor had a duty to warn and instruct the user of the dangers rather than providing a more expansive duty instruction). While Plaintiffs rely on Scott and Fetzer Company v. Montgomery, to support their position, the Court finds Plaintiffs' reliance misplaced. 473 N.E.2d 421 (Ill.App.Ct. 1984). In Scott, a group of plaintiff tenants brought a tort action against the adjoining tenant and the corporation which supplied, installed, and maintained the adjoining tenant's fire alarm system. Id. at 425. The product at issue in that case was a fire alarm system which had the purpose of detecting and stopping the ...


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