United States District Court, D. Delaware
C. Phillips, Jr and David A. Bilson, PHILLIPS GOLDMAN
MCLAUGHLIN & HALL, PA., Wilmington, DE. Attorneys for
E. Reid, Thomas W. Briggs, Jr., and Anthony D. Raucci,
MORRIS, NICHOLS, ARSHT & TUNNEL LLP, Wilmington, DE.
Attorneys for Defendants.
ANDREWS, U.S. DISTRICT JUDGE
CPFilms, Eastman Chemical Company, and Eastman Performance
Films filed a motion to dismiss Plaintiff OC Tint Shop's
First Amended Complaint for failure to state a claim. (D.I.
36). The Court has considered the parties' briefing. For
the following reasons, the Court GRANTS in part and DENIES in
part Defendants' motion to dismiss for failure to state a
alleged by the Complaint, the facts are as follows. Plaintiff
has been in the business of installing window tinting film
for approximately twelve years. (D.I. 35 at 3). Plaintiff has
"purchased SunTek window tinting film from Defendants at
their Anaheim location" for a number of those years.
Id. From early 2016 on, Plaintiff noticed that the
quality of the film purchased from Defendants had diminished
considerably. Id. Plaintiff has found that the film
will often not peel off the liner before installation or is
so sticky that it causes difficulty when installing the
product. Id. Plaintiff has also noticed specks on
the liner and experienced the liner not having enough had
adhesive from proper installation. Id. at 3-4. Due
to these defects, Plaintiff has incurred substantial losses
due to providing warranty work for its customers to replace
or repair the defective film. Id. at 4.
alleges that the degradation of quality resulted from
Defendants' decision to cut costs by removing an
ingredient from the manufacturing of the film. Id.
Plaintiff has alleged substantial incurred costs in the
following amounts: "$275, 000.00 for defective window
tinting film purchased from Defendants, dating back to
2016;" $720, 000.00 in "additional costs in paying
its employees to re-install the new tinting film; $10, 000.00
for defective film purchased, but still in Plaintiffs
possession; $46, 000.00 incurred in warranty work as a result
of the defective window tinting film; and approximately $176,
000.00 in lost revenue." Id. at 5.
brought this action against Defendants CPFilms and Eastman
Chemical Company in the Superior Court of California, Orange
County. Plaintiff seeks recovery for Breach of Contract,
Breach of Warranties, Breach of Good Faith and Fair Dealing,
Violation of CA Unfair Competition law, Intentional
Interference with Prospective Economic Relations, Negligent
Interference with Prospective Economic Relations, Intentional
Interference with Contractual Relations, Intentional
Misrepresentation, Negligent Misrepresentation, and
Concealment. (D.I. 35). Plaintiff also seeks a Declaratory
removed the case pursuant to 28 U.S.C. § 1332 (diversity
jurisdiction). (D.I. 1). Defendants then filed a Motion to
Dismiss Complaint Under Forum Non Conveniens, or in the
Alternative to Transfer Action to District of Delaware based
upon a choice-of-forum clause in the sales contract. (D.I.
10). The United States District Court for the Central
District of California granted the Motion the Transfer. (D.I.
23). By stipulation, the Parties agreed that Plaintiff could
amend its Complaint. (D.I. 34). After Plaintiff filed its
First Amended Complaint (D.I. 35), Defendants filed their
motion to dismiss. (D.I. 36).
reviewing a motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6), the Court must accept the
complaint's factual allegations as true. See Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). Rule
8(a) requires "a short and plain statement of the claim
showing that the pleader is entitled to relief."
Id. at 555. The factual allegations do not have to
be detailed, but they must provide more than labels,
conclusions, or a "formulaic recitation" of the
claim elements. Id. ("Factual allegations must
be enough to raise a right to relief above the speculative
level... on the assumption that all the allegations in the
complaint are true (even if doubtful in fact).").
Moreover, there must be sufficient factual matter to state a
facially plausible claim to relief. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). The facial plausibility
standard is satisfied when the complaint's factual
content "allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged." Id. ("Where a complaint pleads
facts that are merely consistent with a defendant's
liability, it stops short of the line between possibility and
plausibility of entitlement to relief." (internal
quotation marks omitted)).
9(b) of the Federal Rules of Civil Procedure requires a party
alleging fraud or mistake to "state with particularity
the circumstances constituting fraud or mistake."
"A pleading is sufficient under Rule 9(b) if it states
the time, place and specific content of the false
representations as well as the identities of the parties to
the misrepresentation." In re Sony, 758
F.Supp.2d 1077, 1087 (S.D. Cal. 2010) (internal quotations
marks omitted); see also Gerbitz v. ING Bank, FSB,
967 F.Supp.2d 1072, 1078 (D. Del. 2013) (laying out "the
who, what, where, when, how, and why" of plaintiff s
Choice of Law
federal court sitting in diversity must apply the law of the
forum state. In Delaware, the "most significant
relationship test" governs the choice of law analysis
for both contract and tort claims. Deuley v. DynCorp
Intern., Inc., 8 A.3d 1156, 1160 (Del. 2010);
Travelers Indem. Co. v. Lake, 594 A.2d 38, 47 (Del.
1991). "The Delaware Supreme Court has determined that
for contract claims, the Court must consider several factors
in determining which forum's law to apply, including
'the place of contracting, the place of negotiation, the
place of performance, the location of the subject matter of
the contract, and the domicile, residence, nationality, place
of incorporation and place of business of the
parties.'" Enzo Sci., Inc. v. Adipogen
Corp., 82 F.Supp.3d 568, 595 (D. Del. 2015) (quoting
In re Am. LaFrance, LLC, 461 B.R. 267, 272 (Bankr.
D. Del. 2011)). Under Delaware law, choice-of-law provisions
are generally enforceable. Enzo Sci, Inc., 82
F.Supp. at 595 (citing Weiss v. Nw. Broad. Inc., 140
F.Supp.2d 336, 442 (D. Del. 2001)).
tort claims, courts must consider several factors including
the place where the injury occurred, the place where the
conduct causing the injury occurred, the domicile, residence,
nationality, place of incorporation and place of business of
the parties, and the place where the relationship, if any,
between the parties is centered. Travelers Indem.
Co., 594 A.2d at 47. Furthermore, "the effect of
misrepresentation, duress, undue influence and mistake upon a
contract is determined by the law selected by application of
the rules of [Restatement (Second) of Conflict of Law]
§§ 187-88. In turn, § 187 allows the law of
the state chosen by the parties to govern contractual rights
and duties unless the chosen state lacks a substantial
relationship to the parties or transaction or applying the
law of the chosen state will offend a fundamental policy of a
state with a material greater interest." Abry
Partners V, L.P. v. F & W Acquisition LLC, 891 A.2d
1032, 1047 (Del. Ch. 2006).
the contract between the parties states that Delaware law
governs any dispute arising from the contract. The Court sees
no reason to disturb that choice-of-law provision as applied
to the contract claims. Additionally, Plaintiffs tort claims
center on Defendants' misrepresentations and those
misrepresentations' effect on the contractual
relationship between the parties. Under Delaware law, the law
of the state chosen by the parties to govern contractual
rights and duties should therefore apply to Plaintiffs tort
claims as well.
Contract Claims (Counts I-IV)
Complaint alleges the following causes of action in contract:
breach of contract (Count I), breach of the implied warranty
of merchantability (Count II), breach of the express warranty
of merchantability (Count III), and breach of implied
warranty of fitness for a particular purpose (Count IV).
Defendants assert that Plaintiffs contract claims are
precluded by (1) the contract's express exclusion of
express and implied warranty claims and (2) the
contract's limitation of liability provision. (D.I. 37 at
3-4). Plaintiff argues that Defendants are retroactively
barred from arguing that the Contract's disclaimer of
warranties exempts Defendants from liability because
Plaintiff had been purchasing Defendants' product before
receiving the contract in early 2016. (D.I. 40 at 4-5).
Plaintiff also argues that the limitation of liability
provision (1) is unconscionable and (2) "fails of its
essential purpose." Id. at 6-9.
The Disclaimer of Warranties and the Limitation of Liability
Provision are Permitted under Delaware Law
Disclaimer of Warranties
Delaware law permits contracting parties to exclude
warranties of merchantability and fitness in commercial
contracts. Del. Code Ann. tit. 6 § 2-316(2). The
contract language "must mention merchantability and in
case of a writing must be conspicuous" to exclude the
warranty of merchantability. Id. To exclude the
implied warranty of fitness, the contract language must be
"a writing and conspicuous." Id. Here, the
contract language mentions merchantability, is in writing,
and is clearly conspicuous. Specifically, the warranty
disclaimer is set off from the surrounding text of the
contract in all capitals text. (D.I. 37, Ex. B at ¶ 2).
This language is sufficient to preclude all such warranty
argument that Defendants are retroactively barred from
asserting the warranty disclaimer for all of Plaintiff s
purchases is incorrect. While Plaintiff has been purchasing
product from Defendant since before early 2016, Defendants
provided Plaintiff with the new contract in January 2016. As
Plaintiff alleges in its Complaint, the breach of contract
began in early 2016, around the same time that the new
contract was provided. (D.I. 35 at 4). Even taking these
facts in the light most favorable to Plaintiff, Defendants
are not barred from asserting the disclaimer of warranties as
to any purchases after Plaintiff received the new contract
terms in January 2016. Plaintiff chose to continue purchasing
Defendants' products despite the new terms of sale, and
thereby accepted the warranties disclaimer. Plaintiffs claims
are therefore subject to the warranty disclaimer.
The Limitation of ...