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Praxair, Inc. v. General Insulation Co.

March 30, 2009

PRAXAIR, INC. PLAINTIFF,
v.
GENERAL INSULATION COMPANY, D&N INSULATION COMPANY, A DIVISION OF PETCO INSULATION CO., INC., AND SPECIALTY CONSTRUCTION BRANDS INC., DEFENDANTS.
GENERAL INSULATION COMPANY, CROSS CLAIMANT,
v.
SPECIALTY CONSTRUCTION BRANDS, INC., AND D & N INSULATION COMPANY, A DIVISION OF PETCO INSULATION CO., INC., CROSS DEFENDANTS.
D & N INSULATION COMPANY, A DIVISION OF PETCO INSULATION CO., INC., CROSS CLAIMANT,
v.
GENERAL INSULATION COMPANY, AND SPECIALTY CONSTRUCTION BRANDS, INC., CROSS DEFENDANTS.



The opinion of the court was delivered by: Leslie G. Foschio United States Magistrate Judge

REPORT and RECOMMENDATION DECISION and ORDER

JURISDICTION

This action was referred to the undersigned on November 8, 2007, by Honorable Richard J. Arcara. The matter is presently before the court on Plaintiff's motions to file an amended complaint (Doc. Nos. 71 and 87), filed, respectively, on June 30 and August 28, 2008, and on Specialty Construction Brands, Inc.'s motions to dismiss the Second Amended Complaint (Doc. No. 78), filed August 4, 2008, and to dismiss the cross-claims filed by General Insulation Company (Doc. Nos. 68 and 80), filed, respectively, on June 11 and August 11, 2008, and to dismiss the cross-claims filed by D & N Insulation Company (Doc. Nos. 64 and 84), filed, respectively, on June 23 and August 15, 2008.*fn1 .

BACKGROUND and FACTS*fn2

Plaintiff Praxair, Inc. ("Plaintiff" or "Praxair"), commenced this products liability action on October 9, 2007, alleging defective design and manufacture of Childers CP-35 mastic ("Childers CP-35" or "the mastic"), an insulation coating product that Praxair used as a joint sealant in the insulation of the aluminum piping and vessels at Praxair's Cryogenic Testing Facility located in Building 105 in Tonawanda, New York ("the facility"). Complaint ¶ 1. According to Plaintiff, because Childers CP-35 contains chlorides, a fact of which Praxair was not initially aware, the mastic is not suitable or safe for its intended purpose as a sealant for insulating piping and vessels of the type installed at the facility, and it was foreseeable to Defendants that such use would result in damage to the facility's aluminum piping and vessels. Id. In particular, the chlorides in the mastic used for cold insulation reacted with moisture that built up between the aluminum piping and vessels and the insulating covering, causing the formation of acid which resulted in extensive damage to Plaintiff's Cryogenic Testing Facility. Effective remediation of the Cryogenic Testing Facility allegedly required Plaintiff to delay its cryogenic testing operations for one year, during which time Plaintiff lost profit opportunities.

Originally sued as Defendants were H.B.Fuller Company ("H.B. Fuller"), and General Insulation Company ("General Insulation") for negligent design and marketing of Childers CP-35, and D&N Insulation Company ("D&N"), for negligence and breach of contract based on D&N's specification of Childers CP-35 as a sealant for use on Praxair's aluminum piping and vessels. Praxair also sought treble damages against H.B. Fuller for violation of § 1117 the Lanham Act, 15 U.S.C. § 1125(a), for false and misleading advertisements regarding Childers CP-35.

On December 19, 2007, Plaintiff filed a motion to amend the Complaint (Doc. No. 23) to clarify allegations in the Complaint to establish standing under the Lanham Act and to demonstrate a tort duty existed on the part of H.B. Fuller to Plaintiff, and to add as a Defendant H.B. Fuller's wholly-owned subsidiary Specialty Construction Brands, Inc. ("SCB"). Alternatively, should the court determine Plaintiff was without standing to assert the Lanham Act claim, Plaintiff sought to discontinue the action against D&N, which is non-diverse, without prejudice to refiling Plaintiff's state law claims against D&N in New York State Supreme Court, while continuing to pursue Plaintiff's state law claims against SCB and General Insulation in this court based on diversity and supplemental jurisdiction.

On February 5, 2008, Plaintiff and H.B. Fuller filed a joint motion (Doc. No. 51), to dismiss the Complaint against H.B. Fuller, with prejudice, and to add H.B. Fuller's wholly-owned subsidiary Specialty Construction Brands, Inc. ("SCB") as a Defendant in place of H.B. Fuller. On April 23, 2008, Plaintiff filed a Stipulation of Dismissal (Doc. No. 53), dismissing, with prejudice, all claims as against H.B. Fuller, and substituting SCB as Defendant for H.B. Fuller, the dismissed party Defendant, based on H.B.

Fuller's representation that SCB, rather than H.B. Fuller, is the manufacturer and seller of Childers CP-35 mastic. In a text order filed April 24, 2008, Chief Judge Arcara approved the stipulation of dismissal. By order filed May 5, 2008, (Doc. No. 55), the undersigned granted Plaintiff's motion to file an amended complaint substituting SCB for H.B. Fuller, and directing Plaintiff to promptly file such amended complaint. Accordingly, on May 6, 2008, Plaintiff filed the amended complaint (Doc. No. 56) ("the First Amended Complaint"), that is essentially identical to the original complaint, substituting SCB as a Defendant for H.B. Fuller, but does not contain the additional factual allegations regarding standing for the Lanham Act claim or tort duty that Plaintiff, in its then pending December 19, 2007 motion to amend, sought to add.

On May 22, 2008, D&N filed its answer to the First Amended Complaint (Doc. No. 57), asserting cross claims against SCB and General Insulation. On May 27, 2008, SCB filed a motion to dismiss Plaintiff's First Amended Complaint. (Doc. No. 58). On June 2, 2008, Defendant General Insulation filed its answer to the First Amended Complaint (Doc. No. 62), asserting cross claims against SCB and D&N. On June 11, 2008, Defendant SCB filed a motion to dismiss D&N's cross claims (Doc. No. 64), and a supporting Memorandum of Law (Doc. No. 65). On June 23, 2008, SCB filed a motion to dismiss General Insulation's cross claims (Doc. No. 68), and a supporting Memorandum of Law (Doc. No. 69). On June 30, 2008, Plaintiff filed a motion (Doc. No. 71) to file a Second Amended Complaint that is essentially identical to Plaintiff's then pending motion to amend filed on December 19, 2007, but reflects the substitution of SCB as Defendant in place of H.B. Fuller. The motion is supported by the attached Affidavit of Linda H. Joseph, Esq., exhibits, and a memorandum of law.

By Decision and Order filed July 7, 2008 (Doc. No. 73) ("July 7, 2008 Decision and Order"), the undersigned granted Plaintiff's December 19, 2007 motion to file a Second Amended Complaint, ordering Plaintiff to clarify in the Second Amended Complaint the names of the Defendants in both the captions and the body of the caption to reflect the substitution of SCB for H.B. Fuller, and to file the Second Amended Complaint within ten days. July 7, 2008 Decision and Order at 10. Accordingly, Plaintiff's Second Amended Complaint was filed on July 15, 2008 (Doc. No. 74).

The Second Amended Complaint contains the same eight claims for relief asserted in the original complaint as well as in the First Amended Complaint, including (1) strict products liability based on defective design asserted against SCB, General Insulation, and D&N (together, "Defendants") ("First Claim for Relief"); (2) strict products liability based on failure to warn asserted against all Defendants ("Second Claim for Relief"); (3) strict products liability based on manufacturing defect asserted against all Defendants ("Third Claim for Relief"); (4) negligence asserted against D&N ("Fourth Claim for Relief"); (5) breach of contract asserted against D&N ("Fifth Claim for Relief"); (6) a Lanham Act violation asserted against SCB ("Sixth Claim for Relief"); (7) negligent design and manufacture asserted against SCB ("Seventh Claim for Relief"); and (8) negligent distribution of Childers CP-35 asserted against General Insulation ("Eighth Claim for Relief"). Unlike the First Amended Complaint, the Second Amended Complaint contains additional allegations in support of standing to assert the Lanham Act claim against SCB.

On July 21, 2008, General Insulation filed its answer to the Second Amended Complaint (Doc. No. 75) ("General Insulation's Answer"), asserting a cross claim for contribution and indemnification ("General Insulation Cross Claim"), against SCB and D&N. On July 22, 2008, D&N filed its answer to General Insulation's cross claims (Doc. No. 76) ("D&N's Answer"). On August 1, 2008, D&N filed its answer to the Second Amended Complaint (Doc. No. 77), asserting against both SCB and General Insulation cross claims for breach of warranty of merchantability ("First D&N Cross Claim"), and for indemnity and contribution ("Third D&N Cross Claim"), and against General Insulation for breach of warranty of fitness ("Second D&N Cross Claim").

On August 4, 2008, SCB filed a motion to dismiss Plaintiffs' Second Amended Complaint (Doc. No. 78) ("SCB's Motion to Dismiss"), and a supporting Memorandum of Law (Doc. No. 79) ("SCB's Memorandum").

On August 11, 2008, SCB filed a motion to dismiss General Insulation's cross claim as against SCB (Doc. No. 80) ("SCB's Motion to Dismiss General Insulation's Cross Claims"), and a supporting Memorandum of Law (Doc. No. 81) ("SCB's Memorandum - General Insulation's Cross Claim"). That same day, General Insulation filed its answer to D&N's cross claims (Doc. No. 82).

On August 15, 2008, SCB filed a motion to dismiss D&N's cross claims as against SCB (Doc. No. 84) ("SCB's Motion to Dismiss D&N's Cross Claims"), and a supporting Memorandum of Law (Doc. No. 85) ("SCB's Memorandum - D&N's Cross Claims").

On August 28, 2008, Plaintiff filed a document (Doc. No. 87), both opposing SCB's Motion to Dismiss and, alternatively, should the court determine Plaintiff was without standing to assert its Lanham Act claim against SCB, filing a third amended complaint so as to discontinue the action against non-diverse Defendant D&N, without prejudice to refiling Plaintiff's state law claims against D&N in New York State Supreme Court, while continuing to pursue the state law claims against SCB and General Insulation in this court based on diversity and supplemental jurisdiction. The motion is supported by an attached Memorandum of Law ("Plaintiffs' Memorandum"), the Affirmation of Linda H. Joseph, Esq. ("Joseph Affirmation"), and exhibits.

On September 18, 2008, D&N filed a Memorandum of Law opposing Plaintiff's motion to file a third amended complaint (Doc. No. 89) ("D&N's Opposition - Third Amended Complaint").

On September 19, 2008, D&N filed the Affirmation of Lisa A. Coppola, Esq. (Doc. No. 90),and an attached Memorandum of Law opposing SCB's motion to dismiss D&N's cross claims (Doc. No. 90-2). That same day, D&N refiled essentially identical papers to correct some typographical errors (Doc. No. 92 ("First Coppola Affirmation"), and Doc. No. 92-2 ("D&N's Response to SCB")). Also on September 19, 2008, General Insulation filed the Affirmation of Daniel J. Caffrey, Esq. (Doc. No. 91) ("Caffrey Affirmation"), opposing SCB's motion to dismiss General Insulation's cross claims. That same day, SCB filed its response in opposition to Praxair Inc.'s motion to file a third amended complaint (Doc. No. 93) ("SCB's Response").

On September 30, 2008, Plaintiff filed a Memorandum of Law (Doc. No. 94), in further support of Plaintiff's motion to file a third amended complaint ("Plaintiff's Reply"). Also on September 30, 2008, SCB filed three memoranda of law in further support of its motion to dismiss the Second Amended Complaint (Doc. No. 95) ("SCB's Reply"), in further support of its motion to dismiss General Insulation's Cross Claims (Doc. No. 96) ("SCB's Reply - General Insulation's Cross Claims"), and in further support of its motion to dismiss D&N's Cross Claims (Doc. No. 97) ("SCB's Reply - D&N's Cross Claims").

Oral argument was deemed unnecessary.

Based on the following, Plaintiff's motion to file a second amended complaint (Doc. No. 71), is DISMISSED as moot; Plaintiff's motion to file a third amended complaint (Doc. No. 87), is GRANTED; Defendant SCB's motions to dismiss the cross claims of D&N (Doc. No. 64), and General Insulation (Doc. No. 68), are DISMISSED as moot; Defendant SCB's motion to dismiss the Second Amended Compliant (Doc. No. 78), should be GRANTED in part as to Plaintiff's Lanham Act claim and, otherwise, should be DENIED in part; SCB's motion to dismiss the cross claim of General Insulation (Doc. No. 80), should be DENIED; and SCB's motion to dismiss the cross claims of D&N (Doc. No. 84), should be DENIED.

DISCUSSION

1. Dismissal for ...


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