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Duncan Place Owners Association v. Danze, Inc.

United States District Court, N.D. Illinois, Eastern Division

November 15, 2017

DUNCAN PLACE OWNERS ASSOCIATION, on its own behalf and as Assignee of Association members, ., Plaintiffs,


          Edmond E. Chang United States District Judge

         Duncan Place Owners Association (for convenience's sake, call it Duncan Place) is a condominium association in the State of Washington. The association and its individual condo owners contend that faucets sold by Danze, Inc. have failed, causing property damage throughout Duncan Place condos.[1] R. 60, Second Am. Compl. ¶ 46; R. 90, Pl.'s Resp. Br. at 3.[2] According to Duncan Place, Danze has failed to repair or replace the faucets as promised in its written warranty. Second Am. Compl. ¶ 47. Danze previously moved to dismiss Plaintiffs' second amended complaint, R. 61, Def.'s Mot. Dismiss, which was granted in part and denied in part. R. 74, 6/30/2016 Opinion and Order at 54. Only one claim remains: Duncan Place's claim for breach of express warranty against Danze. Now, Danze moves for summary judgment on the breach of express warranty claim, claiming that Duncan Place cannot show it is in privity with Danze or is a third-party beneficiary to the faucet's express warranty. R. 89, Def.'s Mot. Summ. J. ¶ 3. The Court agrees and grants summary judgment.

         I. Background

         In deciding Danze's motion for summary judgment, the Court views the evidence in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In April 2015, Duncan Place and then-Plaintiff Phyllis Zisser filed a Class Action complaint regarding the Danze faucets. R. 21, First Am. Compl.; R. 89-2, Def.'s Statement of Facts (DSOF) ¶ 1; R. 90-1, Pl.'s Resp. to DSOF ¶ 1. Danze's first motion to dismiss followed, and this Court dismissed Duncan Place's breach of implied warranty claims as untimely. R. 56, 9/15/2015 Opinion and Order at 20-21.

         Plaintiffs' Second Amended Complaint came in September 2015, which still named Duncan Place and Zisser as plaintiffs, but also included 41 individually identified condominium owners, as well as an additional singular plaintiff, Daniel Donnelly. Second Am. Compl. ¶¶ 6-9; DSOF ¶ 4; Pl.'s Resp. to DSOF ¶ 4. Along with class-action allegations, the Second Amended Complaint alleged six different claims for relief, including breach of express warranty, breach of warranty of merchantability, negligence, strict products liability, unjust enrichment, and a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act. DSOF ¶ 5; Pl.'s Resp. to DSOF ¶ 5; Second Am. Compl. ¶¶ 54, 71, 80, 91, 97-99, 106, 114. Zisser was dismissed with prejudice, having accepted an Offer of Judgment under Fed.R.Civ.P. 68. R. 70, Stip. of Dismissal; R. 71, 3/29/16 Minute Entry; DSOF ¶ 8; Pl.'s Resp. to DSOF ¶ 8. Then, Danze again moved to dismiss the complaint on various grounds. Def.'s Mot. Dismiss; DSOF ¶ 6; Pl.'s Resp. to DSOF ¶ 6. This Court dismissed the negligence, unjust enrichment, and strict liability products claims as to all Plaintiffs, as well as Donnelly's implied warranty of merchantability claim. 6/30/2016 Opinion and Order; DSOF ¶ 6; Pl.'s Resp. to DSOF ¶ 6. The only surviving claims were for breach of express warranty and Donnelly's Illinois consumer fraud claim, each of which was subject to position statements filed by the Plaintiffs to ensure that each party actually relied on Danze's warranty representations. 6/30/2016 Opinion and Order at 54. After Plaintiffs were unable to allege reliance on Danze's warranty for the individual condo owners, those claims were dismissed. R. 84, 10/11/16 Minute Entry; DSOF ¶ 9; Pl.'s Resp. to DSOF ¶ 9. Plaintiffs also voluntarily dismissed Donnelly. R. 85, 11/16/16 Minute Entry; DSOF ¶ 10; Pl.'s Resp. to DSOF ¶ 10. Thus, in November 2016, only Duncan Place's claim for breach of express warranty remained in the case.

         Because the prior opinion and orders describe the allegations in detail, only those still relevant are set forth here. Danze advertises and sells its faucets in the United States through retailers, wholesalers, and the internet. Second Am. Compl. ¶¶ 12, 21. Danze equips each faucet it sells with a written warranty, which says that “[a]ll parts of the Danze faucet” will be “free from defects in material and workmanship” for as long as the consumer owns it. R. 89-1, Def.'s Br., Exh. B ¶¶ B, C.[3]

         Before Duncan Place was formed among condo owners in the Duncan Place Condominium, another corporation, Duncan Place, LLC, acted as the developer of the building. Pl.'s Resp. Br. at 2. Duncan Place, LLC hired Kimat Duncan Place, LLC to install the building's plumbing, including the now-infamous Danze faucets. Def.'s Br., Exh. F; DSOF ¶ 26; Pl.'s Resp. to DSOF ¶ 26. In July 2008, Kimat Duncan Place, LLC-acting as a subcontractor-bought 78 Danze faucets from a retailer, Keller Supply. R. 90-1, Pl.'s Statement of Facts (PSOF) ¶ 31; R. 91-2, Def.'s Resp. to PSOF ¶ 31; Def.'s Br., Exh. D, Keller Invoices. Keller Supply had previously purchased those same faucets directly from Danze. PSOF ¶ 32; Def.'s Resp. to PSOF ¶ 31; Def.'s Br., Exh. B ¶ A. Kimat Duncan Place then installed the Danze faucets in each unit in Duncan Place. See Def.'s Br., Exh. F; id. Exh. D. Construction Agreement at 1.

         As the individual condominium units were sold, Duncan Place, LLC ceded control of the condominium association and common areas to Duncan Place. Def.'s Br., Exh. H at 16-20. Duncan Place was incorporated in April 2009 as a Washington state non-profit corporation. DSOF ¶ 27; Pl.'s Resp. to DSOF ¶ 27; Def.'s Br., Exh. G. Duncan Place, LLC contemplated the creation of an association made up of the condo unit owners, and solidified Duncan Place Owners Association's role in the Condominium Declarations signed by each individual purchaser. Def.'s Br., Exh. H. § 13.1. The declaration sets out the powers of Duncan Place, which include adopting regulations, contracting with other entities, and regulating the repair and replacement of common elements of the condominium building. Id. § 13.4. Initially, Duncan Place, LLC controlled which members would comprise Duncan Place's leadership, and provided for a transition period over which Duncan Place LLC would relinquish its control as more time went by and units were sold, until eventually Duncan Place's leadership and members would be wholly controlled by the condo owners. Id. §§ 14.1-14.2.

         With that background in mind, in this lawsuit Duncan Place's breach of express warranty claim arises from purported defects in the Danze faucets. Despite representing that the faucets would be free from defects, Danze faucets potentially suffer from a defective, steel-braided water supply hose made with an “inferior low nickel stainless steel alloy, ” making each hose “susceptible to stress corrosion cracking.” Second Am. Compl. ¶¶ 29, 31. As is wont to occur when defective hoses cannot withstand plumbing needs, some of the Danze faucets installed in Duncan Place condos corroded and failed, damaging the building, increasing insurance premiums, requiring the payment of deductible payouts, and causing the need for replacement faucets. Id. ¶ 47. Now, on its own behalf as the owners association for Duncan Place Condominiums, Duncan Place seeks relief for Danze's failure to live up to its warranty. After the dismissal of the other claims and additional discovery, Danze now moves for summary judgment, arguing that Duncan Place cannot show that it was in privity with Danze or that it was an intended third-party beneficiary of Danze's warranty. Def.'s Mot. Summ. J. ¶¶ 7-8.

         II. Legal Standard

         Summary judgment must be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A genuine issue of material fact exists if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In evaluating summary judgment motions, courts must view the facts and draw reasonable inferences in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007). The Court may not weigh conflicting evidence or make credibility determinations, Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 704 (7th Cir. 2011), and must consider only evidence that can “be presented in a form that would be admissible in evidence.” Fed.R.Civ.P. 56(c)(2). The party seeking summary judgment has the initial burden of showing that there is no genuine dispute and that they are entitled to judgment as a matter of law. Carmichael v. Village of Palatine, 605 F.3d 451, 460 (7th Cir. 2010); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir. 2008). If this burden is met, the adverse party must then “set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256.

         III. Analysis

         A. The Text of the Warranty

         Under Washington law, [4] to establish an express warranty, a seller must make an “affirmation of fact or promise” that relates to or describes the product at issue, and that representation must form “the basis of the bargain.” Wash. Rev. Code Ann. § 62A.2-313 (West 2003); see also Cox v. Lewiston Grain Growers, Inc., 936 P.2d 1191, 1198 (Wash. App. Ct. 1997). At its core, the claim that Duncan Place asserts-and its own role in litigating it-depends on the terms of the warranty itself. Although no particular magic words are necessary to create an express warranty, Hartman v. Barnes Grain & Feed Co.,284 P. 754, 755-56 (Wash. 1930), the words used by the seller are determinative as to how it applies. See Fed. Signal Corp. v. Safety Factors, Inc.,886 P.2d ...

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