Salhotra v. Simpson Strong-Tie Company, Inc.

1

2

3

4 UNITED STATES DISTRICT COURT

5 NORTHERN DISTRICT OF CALIFORNIA

6

7 CARY W COOPER, et al., Case No. 19-cv-07901-TSH

8 Plaintiffs,

AMENDED1 ORDER RE: MOTION TO

9 v. DISMISS

10 SIMPSON STRONG-TIE COMPANY, Re: Dkt. No. 35

INC., et al.,

11

Defendants.

12

13 I. INTRODUCTION

14 Plaintiffs brought this putative class action alleging that Defendants’ construction

15 connectors and fasteners prematurely corrode and fail, causing danger to homeowners’ properties

16 and requiring costly repairs. Pending before the Court are Defendants’ Motion to Dismiss

17 pursuant to Federal Rule of Civil Procedure 12(b)(6) and Defendants’ Request for Judicial Notice

18 in Support of their Motion. ECF Nos. 34, 37. Plaintiffs filed an Opposition to the Motion to

19 Dismiss and Defendants filed a Reply. ECF Nos. 41, 42. Having considered the parties’

20 positions, relevant legal authority, and the record in this case, the Court GRANTS Defendants’

21 motion for the following reasons.

22 II. BACKGROUND

23 Defendants Simpson Strong-Tie Company Inc. and Simpson Manufacturing Co., Inc.

24 (jointly, “Simpson”) are a California corporation and Delaware corporation with a principal place

25 of business in Pleasanton, California. First Amended Complaint (“FAC”) ¶¶ 10-11. Simpson

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1 This Amended Order supersedes the Court’s May 15, 2020 Order re: Motion to Dismiss, ECF

27

No. 56. The Amended Order clarifies whether Plaintiffs’ breach of express warranty claim is

1 manufactures, advertises, sells, and distributes steel, structural building products throughout the

2 United States, including various products sold for installation in the foundations, framing, and

3 doors of homes and other buildings to help secure the structures against high-wind events and

4 earthquakes (the “Product”). Id. ¶¶ 1, 10-11, 23-25. The Product is made of pre-formed strips of

5 steel that have flanges used for connecting the Product to various structures. Id. ¶ 23. It works in

6 combination with other steel connectors to form load paths that create resistance to uplift2 and

7 lateral forces which can damage structures. Id. ¶ 25.

8 Plaintiffs Cary W. Cooper and Terri G. Cooper (the “Coopers”) are Georgia residents who

9 own a home in Port St. Joe, Florida. Id. ¶¶ 7, 13. The Coopers purchased their home on August

10 17, 2019. Id. ¶ 14. The property was built in 2004 and the Product was installed on the home. Id.

11 Plaintiffs allege that in 2019, a hurricane hit the area of Port St. Joe and caused severe damage to

12 the Coopers’ home. Id. ¶ 15. Plaintiffs allege that the home suffered extensive damage because

13 the Product was weakened due to premature corrosion and failed to secure the home. Id. They

14 allege it would not have suffered from extensive damage if the Product had functioned as Simpson

15 marketed it would. Id.

16 Plaintiff Fernandina Beach (“Fernandina,” and together with the Coopers, the “Florida

17 Plaintiffs”) is a Florida limited liability company (“LLC”) which owns a home in Fernandina

18 Beach, Florida. Id. ¶¶ 8, 17. It purchased its property in September 2011. Id. ¶ 18. The home

19 was built in 1997 and the Product was installed on it. Id. Because of premature corrosion,

20 Plaintiffs allege, the Product is no longer capable of protecting Fernandina’s home from high wind

21 and seismic events. Id. ¶ 19.

22 Plaintiffs Simon Nguyen and Thoai Doan (jointly, the “California Plaintiffs”) are

23 California residents who own a home in San Jacinto, California. Id. ¶¶ 9, 20. They purchased

24 their home, which was built in or around January 2007, in August 2009. Id. ¶ 21. The Product

25 was installed on their home also. Id. Plaintiffs allege that “signs of corrosion on the Product

26 continue to manifest” on this home as well, compromising the home’s foundation and structural

27

1 support. Id. ¶ 22.

2 Simpson provides installation instructions, design specifications, and “other

3 representations as to the usage and qualities of the Product” in materials, including manuals and

4 guides, which it produces and disseminates to consumers. Id. ¶¶ 38-39. The manuals and guides

5 include corrosion warnings (the “Corrosion Warnings”). Id. ¶ 39. Nevertheless, Plaintiffs allege

6 that Simpson never adequately disclosed that the Product was “subject to corrosion, rusting,

7 failure, deterioration, and disintegration.” Id. They allege that few Class members ever see, and

8 that they never saw, the corrosion warnings and that the warnings “do not adequately disclose

9 Simpson is selling the Product into areas where it will foreseeably corrode long before its usual

10 life, under reasonably foreseeable conditions, even if the installer reasonably follows the

11 installation instructions.” Id. The corrosion warnings, they allege, “fail to disclose, and Simpson

12 never discloses, that the Product is defective because, among other things, as water collects and

13 chlorides develop (for example, after rain), the Product prematurely rusts, spalls the concrete, and

14 gradually loses strength to secure the house.” Id. ¶ 40. “Further,” Plaintiffs assert, “gaps,

15 crevices, and spalls at and below the Product’s embedment line form and moisture and corrosive

16 elements accumulate and concentrate in the gaps and crevices, causing aggressive corrosion.” Id.

17 Plaintiffs believe that installation of the Product onto their structures “complied with

18 Simpson’s installation instructions and [that] deterioration was not due to environmental

19 conditions but[,] rather, Defendants’ defective design of the Product.” Id. ¶ 36. They allege that

20 they purchased their homes and then learned that the Product was beginning to prematurely

21 corrode and deteriorate. Id. ¶ 42. They believe that the Product installed and incorporated into the

22 homes of Class members is also prematurely corroding and deteriorating, and creating dangerous

23 conditions and substantial risk of serious personal injury and property damage, which will likely

24 require repair and replacement of the Product “and will necessarily involve damage to other

25 products.” Id. ¶ 43.

26 Plaintiffs allege that Simpson knew of the Product defect since before they and Class

27 members purchased their properties, and that it failed to disclose it. Id. ¶ 45. They allege that

1 securing structures while knowing that the Product would prematurely corrode and need to be

2 replaced. Id. ¶¶ 45-46. Simpson never adequately warned consumers of this problem and

3 intended to mislead customers into believing that the Product provides adequate corrosion

4 resistance. Id. ¶¶ 50-51. “Simpson also failed adequately to disclose that the Product will fail

5 even when used pursuant to Simpson’s guidelines about which type of Product to use in which

6 installation.” Id. ¶ 52. Plaintiffs argue that Simpson created a “reasonable expectation” among

7 consumers that the Product would have a “useful life spanning the life of the home in which [it]

8 was installed.” Id. ¶ 68. They argue that the Product has not performed in accordance with those

9 expectations, that it was defectively designed, tested, and manufactured, and that it has failed and

10 will continue to fail, causing damage to Plaintiffs’ property and requiring them to spend

11 significant amounts of money to repair and replace the Product. Id. ¶¶ 53-55.

12 Plaintiffs filed their original class action complaint on December 2, 2019. ECF No. 1.

13 Simpson filed a motion to dismiss on February 5, 2020. ECF No. 25. Rather than oppose the

14 motion, Plaintiffs filed their FAC on February 25, 2020. ECF No. 25. In their FAC, they assert

15 nine causes of action against Simpson: (1) unfair competition, or unfair or deceptive acts or

16 practices, in violation of the California Consumers Legal Remedies Act (“CLRA”), California

17 Civil Code § 1770(a)(5) and (a)(7); (2) unlawful business practices in violation of the California

18 unfair competition law (“UCL”), California Business and Professions Code § 17200 et seq.; (3)

19 unfair business practices in violation of the UCL; (4) a violation of Florida’s Deceptive and Unfair

20 Trade Practices Act (“FDUTPA”), Florida Statute § 501.201 et seq.; (5) breach of express

21 warranty; (6) breach of implied warranty of fitness; (7) breach of implied warranty of

22 merchantability; (8) negligence; and (9) fraud through non-disclosure or concealment. Simpson

23 filed its Motion to Dismiss the FAC (the “MTD”) on March 17, 2020, asserting dismissal is

24 warranted pursuant to Federal Rule of Civil Procedure 12(b)(6).

25 III. LEGAL STANDARD

26 Federal Rule of Civil Procedure 12(b)(6) provides that a party may seek dismissal of a suit

27 for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). To survive

1 true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678

2 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plausibility does not

3 mean probability, but it requires “more than a sheer possibility that a defendant has acted

4 unlawfully.” Iqbal, 556 U.S. at 687. In considering a motion to dismiss, the court accepts factual

5 allegations in the complaint as true and construes the pleadings in the light most favorable to the

6 nonmoving party. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.

7 2008).; Erickson v. Pardus, 551 U.S. 89, 93-94 (2007). However, “the tenet that a court must

8 accept a complaint’s allegations as true is inapplicable to threadbare recitals of a cause of action’s

9 elements, supported by mere conclusory statements.” Iqbal, 556 U.S. at 678.

10 If a Rule 12(b)(6) motion is granted, the “court should grant leave to amend even if no

11 request to amend the pleading was made, unless it determines that the pleading could not possibly

12 be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en

13 banc) (citations and quotations omitted). However, a court “may exercise its discretion to deny

14 leave to amend due to ‘undue delay, bad faith or dilatory motive on part of the movant, repeated

15 failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing

16 party . . ., [and] futility of amendment.’” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876,

17 892–93 (9th Cir. 2010) (alterations in original) (quoting Foman v. Davis, 371 U.S. 178, 182

18 (1962)).

19 IV. DISCUSSION

20 A. Simpson’s Request for Judicial Notice

21 Simpson requests judicial of the following items: Simpson’s High Wind-Resistant

22 Construction Application Guide (the “Application Guide”); pages from a 2001 archive of Simpson

23 Strong-Tie Company Inc.’s website, retrieved from the Internet Archive (the “Website”); pages

24 from the official website for City of Fernandina Beach, Florida; a map showing the City of

25 Fernandina Beach, located on the North East Atlantic coast of Florida; pages from the official

26 website for Port St. Joe, Florida; a map showing the Port St. Joe, Florida located on the North

27 West Gulf of Mexico coast of Florida; a 2019 North Atlantic hurricane tracking chart, prepared by

1 A court may take judicial notice of facts that are “not subject to reasonable dispute” when

2 they “can be accurately and readily determined from sources whose accuracy cannot reasonably be

3 questioned.” Fed. R. Evid. R. 201(b). Judicial notice may be taken at any stage of a proceeding.

4 Fed. R. Evid. R. 201(d). Simpson’s requests are unopposed, and Plaintiffs either rely on the

5 documents requested (the Application Guide and the website pages), meaning they’re not subject

6 to dispute, or the items are otherwise proper subjects for judicial notice. See Mack v. South Bay

7 Beer Distribs., 798 F.2d 1279, 1282 (9th Cir. 1986) (matters of public record); Caldwell v.

8 Caldwell, 2006 WL 618511, at *11 (N.D. Cal. Mar. 13, 2006) (publicly accessible websites).

9 Additionally, independent of judicial notice, “a court may consider material which is

10 properly submitted as part of the complaint on a motion to dismiss without converting the motion

11 [] into [one] for summary judgment. If the documents are not physically attached to the

12 complaint, they may be considered if the documents’ authenticity is not contested and the

13 plaintiff’s complaint necessarily relies on them.” Lee v. City of Los Angeles, 250 F.3d 668, 688

14 (9th Cir. 2001) (citations and internal quotation marks omitted). That’s the case here, where

15 Plaintiffs’ rely on the Application Guide and Website repeatedly in their FAC.

16 Accordingly, the Court GRANTS Simpson’s requests for judicial notice.

17 B. Simpson’s Motion to Dismiss

18 1. The Plausibility of Plaintiffs’ Allegations

19 Simpson argues that “all nine of Plaintiffs’ causes of action [] lack plausibility because . . .

20 (1) the Corrosion Warnings defeat the contention that Simpson failed to warn that the Product

21 could corrode even if selected and installed correctly; (2) Plaintiffs do not and cannot properly

22 allege that they or anyone else followed Simpson’s recommendations, guidelines, and warnings

23 regarding the specification, installation, and maintenance of the Product; and (3) there is no basis

24 for any claim of reliance since Plaintiffs admit, among other things, that they never read the

25 Corrosion Warnings.” The Court agrees.

26 The foundation of Plaintiffs’ claims is their allegations that the Product prematurely

27 corrodes, and that Simpson failed to disclose this defect. According to the Application Guide,

1 models for use at different locations on a structure (ground level, between floors, roof level, etc.),

2 in different environments, for use with different materials, and to accommodate different loads.

3 The Application Guide instructs that some models offer more effective protection against

4 corrosion risk than others. For example, some models are better suited for “salt marine and

5 chloride-containing environments.” Application Guide at 9. The Guide provides “Guidelines for

6 Selecting Corrosion-Resistant Connectors and Fasteners.” Those guidelines instruct consumers to

7 evaluate the intended application of the product, evaluate the exposure to moisture and treatment

8 chemicals, and to use a Corrosion Classification Table. Id. The Application Guide also includes

9 information and guidance regarding the choice of galvanization based on the “level of corrosion

10 resistance.” See id. at 12. Yet Plaintiffs have not pled which of Simpson’s products are installed

11 in their homes, or in what application, what material the products were made of, or what coating,

12 if any, was used. They allege that the Product is “galvanized hurricane straps.” FAC ¶ 1. But

13 then they allege the Product “includes, but is not limited to, various galvanized steel hurricane

14 straps including, but not limited to, steel, galvanized, and hot-dipped galvanized straps.” FAC ¶

15 24. And they allege that the Product “includes mudsill anchors.” Id.3 They allege that the

16 Product “is installed in various locations throughout homes and other structures, including the

17 foundation, framing, and doors.” Id. ¶ 25. Since Plaintiffs do not allege details concerning which

18 fastener or connector models were installed on their homes, their allegations only permit the Court

19 to infer a mere possibility that the products were even designed to be used in the locations and

20 environments they were.4 That is not enough to satisfy pleading requirements. “[B]efore

21 proceeding to discovery, a complaint must allege facts suggestive of illegal conduct,” not merely

22 consistent with it. Twombly, 550 U.S. at 557, 563, n. 8; id. at 558 (“‘[A] district court must retain

23 the power to insist upon some specificity in pleading before allowing a potentially massive factual

24

3 From the Application Guide, it appears that mudsill anchors are not even a type of hurricane tie.

25

See Application Guide at 15, 21, 51.

4 In their Opposition, Plaintiffs assert that, “[i]n reality, Plaintiffs define the Product at

26

the very beginning of the FAC, providing details as to its use, manufacture, marketing, and defect

throughout the Complaint.” Opp’n at 2. They then cite a range of 22 paragraphs (¶¶ 23-44) in the

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FAC. Those paragraphs cover topics like “The Need for High Wind and Seismic Protection” and

1 controversy to proceed.’”) (quoting Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459

2 U.S. 519, 528, n. 17 (1983)).5

3 Plaintiffs also can’t say for sure when the products were installed on their homes. They

4 only state that the homes were built “and the Product was installed.” (If Plaintiffs meant to say

5 that the Product was installed at the time their homes were built, then that would be in 1997, 2004,

6 and January 2007, at least 12 years before this action was filed.) They don’t say when they

7 discovered signs of corrosion. And they don’t say whether the products installed on their homes

8 were installed in accordance with Simpson’s recommendations. They allege that they are

9 “informed and believe that the Product was installed and incorporated into the construction of the

10 homes . . . in reasonable accordance with the information, installation instructions, design

11 specifications, and other representations provided, made, and disseminated by Simpson.” FAC ¶

12 41 (emphasis added). But information and belief are not always enough to satisfy the pleading

13 requirements. “Courts have read . . . Rule 8, together with Rule 11, to permit claimants to aver

14 facts that they believe to be true, but that lack evidentiary support at the time of pleading.

15 Generally, however, such averments are allowed only when the facts that would support the

16 allegations are solely within the defendant’s knowledge or control.” 2 Moore’s Federal Practice -

17 Civil § 8.04 (2020) (citations omitted); see Park v. Thompson, 851 F.3d 910, 928 (9th Cir. 2017)

18 (“‘The Twombly plausibility standard . . . does not prevent a plaintiff from pleading facts alleged

19 upon information and belief where the facts are peculiarly within the possession and control of the

20 defendant or where the belief is based on factual information that makes the inference of

21 culpability plausible.’”) (quoting Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010))

22 (emphasis added); Barnes v. Harris, 783 F.3d 1185, 1196-97 (10th Cir. 2015) (cases from other

23 circuits allowing more relaxed pleading standard when relevant information is outside plaintiffs’

24 control were inapplicable because facts in question were not entirely within defendants’ control

25 and plaintiffs were empowered to obtain that information). In this case, all the relevant

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5 If, for example, a low-corrosion-resistance fastener were used in an environment with high

1 information is either within Plaintiffs’ knowledge or possession, or if it isn’t, Plaintiffs are best

2 positioned to obtain it. Plaintiffs have not “alleged what [they] can, based on the information

3 [they have].” Clifton v. Houghton Mifflin Harcourt Publ’g Co., 152 F. Supp. 3d 1221, 1225 (N.D.

4 Cal. 2015). And if they do not know when the Product was installed in their homes or whether it

5 was installed properly, that raises a pretty strong inference that they’re speculating about the

6 reasons for and rate of corrosion of the Product. See Delphix Corp. v. Actifio, Inc., 2014 U.S. Dist.

7 LEXIS 132310, *5 (N.D. Cal. Mar. 19, 2014) (where only some allegations are qualified with “on

8 information and belief,” it creates an inference that the plaintiff “likely lacks knowledge of

9 underlying facts to support the assertion, and is instead engaging in speculation to an undue

10 degree”); id. at *5, n. 2 (“Using the phrase [“on information and belief”] provides no [] protection

11 as it cannot lessen the requirements of reasonable pre-suit investigation under the rules.”).

12 Plaintiffs’ allegations based on “information and belief” don’t nudge their complaint across the

13 finish line of plausibility.

14 Without alleging which models were installed on Plaintiffs’ homes, where on the structures

15 the Product was installed, if it was installed in accordance with Simpson’s recommendations, or

16 when it was installed, the FAC doesn’t allege facts plausibly suggesting that the Product was

17 defective—i.e., that it prematurely corroded—or that it will “fail even when used pursuant to

18 Simpson’s guidelines about which type of Product to use in which installation.” Id. ¶ 52. The

19 only plausible inference is that some connector or fastener produced by Simpson and installed on

20 Plaintiffs’ homes in some environment in some manner, applied to some other material, corroded

21 and lost strength after being installed for some amount of time. This doesn’t support an inference

22 of more than a mere possibility of Simpson’s misconduct. Iqbal, 556 U.S. at 679.

23 Second, Simpson is correct that the Corrosion Warnings “defeat the contention that

24 Simpson failed to warn that the Product could corrode even if selected and installed correctly.”

25 Plaintiffs allege that the Corrosion Warnings “never disclose that the Product will corrode under

26 reasonably foreseeable conditions even when the installer follows the instructions.” FAC ¶ 46.

27 And they allege that Simpson “created a reasonable expectation” that the Product would have a

1 relies in some measure on these allegations (the omissions and misrepresentations). But neither of

2 the allegations is tenable based on the FAC.

3 Plaintiffs repeatedly reference the Application Guide, but it never states or suggests that

4 proper selection and installation of Simpson’s product will make the products perpetually

5 corrosion-proof. In fact, the Application Guide repeatedly disclaims exactly that. It states under a

6 section called “Understanding the Corrosion Issue”:

7 Many environments and materials can cause corrosion, including

ocean salt air, fire retardants, fumes, fertilizers, preservative-treated

8 wood, de-icing salts, dissimilar metals and more. Metal connectors,

fasteners and anchors could corrode and lose load-carrying capacity

9 when installed in corrosive environments or when installed in contact

with corrosive materials.

10

The many variables present in a building environment make it

11 impossible to accurately predict if, or when, corrosion will begin or

reach a critical level. This relative uncertainty makes it crucial that

12 specifiers and users are knowledgeable of the potential risks and

select a product suitable for the intended use. It is also prudent that

13 regular maintenance and periodic inspections are performed,

especially for outdoor applications.

14

It is common to see some corrosion in outdoor applications. Even

15 stainless steel can corrode. The presence of some corrosion does not

mean that load capacity has been affected or that failure is imminent.

16 . . .

17 Application Guide at 11 (emphasis added). The Guide even advises, “[i]f significant corrosion is

18 apparent or suspected, then the framing members, fasteners and connectors should be inspected

19 by a qualified engineer or qualified inspector. Replacement of affected components may be

20 appropriate.” Id. (emphasis added). The Guide makes clear how different variables, including the

21 degree of moisture in the environment, the type of wood being used and the wood moisture level,

22 and whether or not fasteners are painted, may affect the rate of corrosion. See Application Guide

23 at 9-10. It details what finishes and materials achieve what level of corrosion resistance and

24 should be used in different contexts. Id. at 12. And it advises that, “[d]ue to the many variables

25 involved, Simpson Strong-Tie cannot provide estimates of service life of connectors and

26 fasteners.” Id. at 9 (emphasis added). No one reading the Application Guide could reasonably

27 expect that Simpson’s products would never corrode even if installed exactly according to

1 need to be replaced. Thus, the Application Guide, which Plaintiffs themselves rely on, eviscerates

2 their allegations. See Lawrence v. Castro, 749 Fed. Appx. 631, 632 (9th Cir. 2019) (A “court need

3 not accept as true allegations that contradict documents or exhibits attached to the complaint, or

4 allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable

5 inference.”) (citing Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001));

6 Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010) (“We accept as true all well-

7 pleaded allegations of material fact. . . . We are not, however, required to accept as true allegations

8 that contradict exhibits attached to the Complaint or matters properly subject to judicial notice, or

9 allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable

10 inferences.”); see Jackson v. Romero, 2020 WL 133906, at *2 (W.D. Wash. Jan. 13, 2020)

11 (“Moreover, if an exhibit attached to a complaint contradicts an assertion in the complaint and

12 reveals information that prohibits recovery as a matter of law, the information provided in the

13 exhibit trumps the allegation in the complaint.”) (citing Wilson v. Fitter, 2009 WL 6908049, at *2

14 (C.D. Cal. Nov. 5, 2009)).

15 The other evidence that Plaintiffs point to is a March 7, 2011 letter from Simpson

16 addressed to “whom it may concern” (Plaintiffs don’t say whom), which Plaintiffs assert

17 “acknowledge[d] that ‘Simpson Strong-Tie ha[d] become aware of problems regarding concrete

18 spalling and corrosion of embedded products around the perimeter of some homes in Oahu,

19 Hawai‘i.’” FAC ¶ 48 (quoting the March 7, 2011 letter, ECF No. 28-1). Looking at the letter, that

20 appears to be true. But the letter doesn’t really support Plaintiffs’ allegations. Simpson did

21 acknowledge that it had become aware of problems with concrete spalling and corrosion of its

22 products, but it wrote “there does not appear to be any defect in the design or manufacturing of

23 such products.” It wrote that during the course of its investigation into the matter, it had found

24 “widespread mis[-]installations of the aforementioned embedded concrete products which can

25 adversely affect their allowable load capacity.” It informed readers that it was writing to address

26 proper installation of the products, and recommended “a number of ways to reduce the occurrence

27 of mis[-]installation of these products and spalling of concrete.” What Simpson did not say is that

1 alternative reason for the corrosion of products installed in Plaintiffs’ homes: mis-installation.6

2 Since the FAC does not plausibly allege that the Product was subject to premature

3 corrosion or defective in any way, or that Simpson represented that its products would never

4 corrode, fail, or need to be replaced, the FAC does not plausibly allege that Simpson concealed a

5 defect in the Product or otherwise misrepresented the quality or durability of its products. Each of

6 Plaintiffs’ claims fail because of this. The Court turns now to the individual claims. Because

7 Plaintiffs’ second and third causes of action, their California unfair competition law claims, are

8 based on violations asserted in their other causes of action, the Court will discuss those claims last.

9 2. Plaintiffs’ CLRA Claim

10 Plaintiffs’ first cause of action is under the CLRA. “The CLRA makes unlawful various

11 ‘unfair methods of competition and unfair or deceptive acts or practices undertaken by any person

12 in a transaction intended to result or which results in the sale or lease of goods or services to any

13 consumer.’” Steroid Hormone Product Cases, 181 Cal. App. 4th 145, 155 (2010) (“SPH”)

14 (quoting Civ. Code, § 1770(a)). “It allows ‘any consumer who suffers any damage as a result of

15 the use or employment by any person of a [prohibited] method, act, or practice’ to bring an action

16 to recover or obtain actual damages, injunctive relief, restitution, and/or punitive damages.” SPH,

17 181 Cal. App. 4th at 155 (quoting Cal. Civ. Code, § 1780(a)). Plaintiffs allege that Simpson

18 engaged in both unfair competition and unfair or deceptive acts in violation of Cal. Civ. Code §

19 1770(a)(5) and (a)(7). FAC ¶ 73. “These provisions of the CLRA proscribe both fraudulent

20 omissions and fraudulent affirmative misrepresentations.” Herron v. Best Buy Co., 924 F. Supp.

21 2d 1161, 1169 (E.D. Cal. 2013) (citing Outboard Marine Corp. v. Superior Court, 52 Cal. App. 3d

22 30, 36 (1975); Collins v. eMachines, Inc., 202 Cal. App. 4th 249, 255 (2011)). Plaintiffs allege

23 that “Defendants represented, through their material omission to disclose that the Product will

24 corrode even when installed as Simpson recommends, that the Product had benefits or

25 characteristics that it did not actually have.” FAC ¶ 73. “This omission,” they allege, “was also a

26

27

6 The Court does not suggest that because Simpson attributed the problems to mis-installations,

1 false representation that the Product was of a particular standard or quality.” Id. Plaintiffs,

2 however, have not plausibly alleged that Simpson misrepresented the quality of its products, or

3 that it omitted a defect—material or otherwise—it had been concealing, or omitted that its

4 products could corrode even when installed properly. The Application Guide makes clear that

5 Simpson’s products could corrode. On this alone, Plaintiffs fail to state a claim under Cal. Civ.

6 Code § 1770(a)(5) or (a)(7). See Spiegler v. Home Dept U.S.A., Inc., 2008 WL 2699787, at *11

7 (C.D. Cal. June 30, 2008) (“Because plaintiffs have failed to identify any misrepresentation or

8 actionable omission, the Court concludes that plaintiffs have failed to state a claim under Cal. Civ.

9 Code § 1770(a)(5).”).

10 Simpson also argues that Plaintiffs’ CLRA also fails because Plaintiffs cannot show

11 reliance. An essential element for a fraudulent omission or false representation claim is actual

12 reliance. See Daniel v. Ford Motor Co., 806 F.3d 1217, 1225 (9th Cir. 2015) (citing Cohen v.

13 DIRECTV, Inc., 178 Cal. App. 4th 966, 980 (2009) (CLRA); In re Tobacco II Cases (Tobacco II),

14 207 P.3d 20, 39 (Cal. 2009) (UCL); Alliance Mortgage Co. v. Rothwell, 10 Cal. 4th 1226, 1239

15 (1995). To prove reliance on an omission, a plaintiff must show that the defendant’s fraudulent

16 conduct was an immediate cause of the plaintiff’s injury-producing conduct. See Daniel, 806 F.3d

17 at 1225. “That one would have behaved differently can be presumed, or at least inferred, when the

18 omission is material,” id. (citing Tobacco II, 207 P.3d at 39), such as with alleged defects that

19 create “‘unreasonable safety risks,’” Daniel, 806 F.3d at 1225 (quoting Ehrlich v. BMW of N. Am.,

20 LLC, 801 F. Supp. 2d 908, 917-19 (C.D. Cal. 2010)). Simpson argues that because Plaintiffs

21 allege that “few class members ever see, and [] none of the named Plaintiffs saw” the Corrosion

22 Warnings, FAC ¶ 39, they cannot prove reliance because they cannot show they would have been

23 aware of information about alleged Product defects if they had been disclosed.

24 Even though a change in behavior can be presumed if the omitted information is material, a

25 plaintiff alleging fraud must still be able to show she would have been aware of the information

26 had it been disclosed. Sud v. Costco Wholesale Corp., 229 F. Supp. 3d 1075, 1083 (N.D. Cal.

27 2017) (citing Daniel, 806 F.3d at 1225-26). To meet this test, a plaintiff need not prove she

1 disclosure and . . . that [she] would have been aware of information disclosed using that method.’”

2 Baranco v. Ford Motor Co., 294 F. Supp. 3d 950, 967 (N.D. Cal. 2018) (finding the court could

3 plausibly draw inference that plaintiff would have received information on defect had Ford

4 publicized the defect through authorized dealer) (quoting Daniel, 806 F.3d at 1227 (finding the

5 same)).7 Plaintiffs argue the Court can infer that, “had Simpson disclosed the omitted information,

6 Plaintiffs would have been aware of it or would not have been subjected to the danger at all. . . . At

7 a minimum, builders, suppliers, real estate brokers, and building inspectors could have disclosed

8 the extent of the defect, allowing Plaintiffs to decide whether to purchase a home with dangerously

9 unsafe hurricane straps, which no reasonable consumer would do.” The Court declines to address

10 the theoretical question of whether that could be a plausible method of disclosure because, as

11 Simpson correctly observes, Plaintiffs have not alleged any facts in the FAC in support of such a

12 theory. Under the current state of the pleadings, the Court agrees with Simpson that Plaintiffs

13 have not plausibly alleged reliance.

14 Simpson also argues that the Florida Plaintiffs’ CLRA and UCL claims fail because, as

15 non-California residents, they do not allege sufficient contacts with California. Neither the CLRA

16 nor the UCL applies to actions occurring outside of California that injure non-residents. Ice

17 Cream Distributors of Evansville, LLC v. Dreyer’s Grand Ice Cream, Inc., 2010 WL 3619884, at

18 *8 (N.D. Cal. Sept. 10, 2010) (UCL) (citations omitted); Ehret v. Uber Techs., Inc., 68 F. Supp. 3d

19 1121, 1130 (N.D. Cal. 2014) (CLRA). “State statutory remedies under the CLRA and UCL may

20 be available to non-California residents if those persons are harmed by wrongful conduct

21 occurring in California.” In re Toyota Motor Corp., 785 F. Supp. 2d 883, 916 (C.D. Cal. 2011)

22 (emphasis in original). “In determining whether the UCL and CLRA apply to non-California

23 residents, courts consider where the defendant does business, whether the defendant’s principal

24

25

7 The omissions analysis differs for affirmative misrepresentation principles, where reliance

requires the consumer to have seen or read the misrepresentation. Baranco, 294 F. Supp. 3d at

26

967 (citing In re Tobacco II Cases, 46 Cal.4th 298, 328 (2009) (in affirmative representation case,

reliance satisfied where “a plaintiff alleges exposure to a long-term advertising campaign”); Mazza

27

v. Am. Honda Motor Co., Inc., 666 F.3d 581, 595 (9th Cir. 2012) (no presumption of reliance

1 offices are located in California, where class members are located, and the location from which

2 advertising and other promotional literature decisions were made.” In re Toyota Motor Corp., 785

3 F. Supp. 2d at 917. “The critical issues [] are whether the injury occurred in California and

4 whether the conduct of Defendants occurred in California. If neither of these questions can be

5 answered in the affirmative, then [a] Plaintiff will be unable to avail herself of these laws.”

6 Tidenberg v. Bidz.com, Inc., 2009 WL 605249, at *4 (C.D. Cal. Mar. 4, 2009). For example, in In

7 re Toyota, the Central District of California dismissed the foreign plaintiffs’ claims under the UCL

8 and CLRA against Toyota North America, which was headquartered in California, because they

9 didn’t allege “with sufficient detail that the point of dissemination from which advertising and

10 promotional literature that they saw or could have seen is California.” 785 F. Supp. 2d at 917

11 (emphasis in original). Simpson argues that “the Coopers and Fernandina do not allege any

12 connection between themselves and California sufficient to sustain their claims under the CLRA

13 and UCL, and the inclusion of the California Plaintiffs in the FAC does not cure the problem for

14 the non-California Plaintiffs, whose claims must be dismissed without leave to amend.” Mem. at

15 22. In their opposition, Plaintiffs argue that Simpson’s marketing and sales decisions are made

16 from its home office in California. Opp’n at 20. But they do not allege that fact in the FAC, even

17 though Simpson raised this argument in its motion to dismiss the OC and they had opportunity to

18 do so. Simpson is correct that Plaintiffs’ have not alleged that the Florida Plaintiffs have sufficient

19 contacts with California to be able to avail themselves of the CLRA or UCL.

20 Lastly, Simpson argues that Fernandina cannot assert a claim under the CLRA because the

21 CLRA excludes LLC’s from the definition realm of “consumers” who can assert a claim under

22 that Act. Mem. at 23 (citing Cal. Civ. Code § 1761(c), (d)). Simpson’s interpretation of the

23 statute is correct. See Bristow v. Lycoming Engines, 2007 WL 1752602, at *5 (E.D. Cal. June 15,

24 2007) (“A corporation, however, cannot seek or acquire a plane for ‘personal, family, or

25 household purposes,’ and the language of the statute clearly envisions a person as the ‘individual’

26 permitted to bring suit.”). Plaintiffs don’t attempt to argue otherwise. They devote a mere three

27 sentences to this point: “The owners of Fernandina Beach use the home primarily as a vacation

1 this fact.” Opp’n at 20. But they cite no caselaw which stands for the proposition that an LLC

2 becomes a “consumer” simply because some of its members use real property onto which covered

3 “goods” are affixed. The Court is not persuaded it does. See id. at *5, n. 9 (“The plane owned by

4 [the corporation] may be used by [its president] for “personal purposes”-and was probably even

5 contemplated for such use at the time of its purchase-but the language of the statute clearly

6 contemplates that the ‘personal purposes’ be held by the purchaser, not merely some future user.

7 Otherwise, a corporation who owned aircraft but rented them out for recreational use, for example,

8 would similarly have standing to sue under the CLRA.”).

9 For all these reasons, Plaintiffs have not plausibly alleged a claim under the CLRA.

10 3. Plaintiffs’ FDUTPA Claim

11 Plaintiffs’ fourth cause of action is under the FDUTPA, Fla. Stat. § 501.201 et seq. The

12 FDUTPA declares unlawful, “[u]nfair methods of competition, unconscionable acts or practices,

13 and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Id. §

14 501.204(1). To state a claim for either injunctive relief or damages under the Act, a plaintiff must

15 allege that a defendant engaged in a deceptive act or practice in trade. Kertesz v. Net

16 Transactions, Ltd., 635 F. Supp. 2d 1339, 1348 (S.D. Fla. 2009) (citations and internal quotation

17 marks omitted). “A deceptive practice is one that is ‘likely to mislead.’” Id. (quoting Davis v.

18 Powertel, Inc., 776 So. 2d 971, 974 (Fla. Dist. Ct. App. 2000)). This claim is once more based on

19 Plaintiffs’ allegation that “Simpson failed to inform consumers that the Product would

20 prematurely corrode long before a reasonable consumer would expect under the circumstances

21 even when selected and installed pursuant to Simpson’s product recommendations and

22 instructions.” FAC ¶ 94. They allege that Simpson “employed fraud, deception, and the knowing

23 concealment, suppression, or omission of material facts in the sale and advertisement of the

24 Product” by “failing to disclose to, or concealing from, consumers . . . material facts about the

25 defective nature of the Product; and failing to disclose its own knowledge of the defective nature

26 of the Product.” Id. ¶ 95. They allege they and Class members were misled by Simpson’s

27 omission. Id. ¶ 96. But again, the FAC does not plausibly allege that Simpson’s products suffered

1 plausibly allege that Simpson misled consumers. And because Plaintiffs have not plausibly

2 alleged that Simpson’s products suffered from defects, they’ve also not plausibly alleged that they

3 were injured due to any defect in Simpson’s products. They’ve failed to state a claim under the

4 FDUTPA.

5 4. Plaintiffs’ Breach of Warranty Claims

6 Plaintiffs’ fifth, sixth, and seventh causes of action are breach of warranty claims. Claim

7 five alleges a breach of express warranty, claim six a breach of the implied warranty of fitness,

8 and claim seven a breach of the implied warranty of merchantability. All three claims are

9 premised on Plaintiffs’ assertion that “the Product does not have the quality that a buyer would

10 reasonably expect and was therefore not merchantable.” FAC ¶¶ 105, 113, 121.

11 Under their express warranty claim, Plaintiffs allege that the quality a buyer would expect

12 based on Simpson’s product descriptions was a Product that would “last the entire life of a home.”

13 As discussed earlier, that allegation is plainly false. The Application Guide gives no impression

14 that Simpson’s products would offer protection ad infinitum. See, e.g., Application Guide at 9

15 (“Due to the many variables involved, Simpson Strong-Tie cannot provide estimates of service life

16 of connectors and fasteners.”); id. at 11 (“Replacement of affected components may be

17 appropriate.”).

18 Furthermore, Plaintiffs do not plead any terms express warranty terms. They assert in their

19 Opposition that they alleged the terms of Simpson’s express warranty “with reference to the

20 limited warranty.” Opp’n at 9. But the FAC doesn’t even quote the Limited Warranty, and

21 instead cites in a footnote to the page of the Application Guide which contained the warranty. See

22 FAC ¶ 106, n. 8. It’s perhaps for good reason that Plaintiffs didn’t conspicuously reference the

23 Warranty, however, as it also clearly contravenes Plaintiffs’ claims. See, e.g., Application Guide

24 at 6 (“This warranty does not apply to uses not in compliance with specific applications and

25 installations set forth in this application guide, or to non-catalog or modified products, or to

26 deterioration due to environmental conditions.”) (emphasis added); id. (“Due to the particular

27 characteristics of potential impact events, the specific design and location of the structure, the

1 damage may nonetheless result to a structure and its contents . . . .”) (emphasis added). The

2 Simpson Website, which Plaintiffs also cite in their FAC, contains a Limited Warranty page with

3 essentially identical language. See RJN, Ex. B at 31, ECF No. 36-2. Plaintiffs do not even

4 address this language in their Opposition (they cite part of it but ignore it, see Opp’n at 9-10), even

5 though Simpson cited it in its Memorandum. They do not allege a plausible claim for breach of

6 express warranty.

7 Under their implied warranty claims, Plaintiffs allege that Simpson’s “product is not fit for

8 the ordinary purpose for which such goods are sold.” FAC ¶¶ 114, 122. Yet Plaintiffs haven’t

9 plausibly alleged that any of Simpson’s products were defective or unfit for use. Furthermore, the

10 Application Guide expressly disclaims both implied warranties. Under Florida law, “a seller may

11 limit [its] liability exposure by disclaiming the implied warranty of merchantability [or implied

12 warranty of fitness], provided the disclaimer mentions merchantability [or fitness], and in the case

13 of a writing, that it be conspicuous. McCormick Machinery, Inc. v. Julian E. Johnson & Sons, Inc.,

14 523 So. 2d 651, 653 (Fla. Dist. Ct. App. 1988) (citing Fla. Stat. § 672.316(2)). “Under California

15 Commercial Code Section 2316, the implied warranty of merchantability [or implied warranty of

16 fitness] . . . may be excluded or modified if the language expressly mentions merchantability [or

17 fitness] and is conspicuous.” Clark v. LG Elecs. U.S.A., Inc., 2013 WL 5816410, at *12 (S.D. Cal.

18 Oct. 29, 2013). The Limited Warranty in the Application Guide and on the Simpson website

19 instructs:

20 This warranty is expressly in lieu of all other warranties, expressed or

implied, including warranties of merchantability or fitness for a

21 particular purpose, all such other warranties being hereby expressly

excluded.

22

23 Application Guide at 6; Website at 31. Once again, Plaintiffs don’t address this language in their

24 Opposition. It satisfies the requirements under both Florida and California law. Plaintiffs allege

25 that Simpson’s attempt to disclaim these warranties is “unenforceable” because each disclaimer

26 “was not conspicuous as required by law, and was both procedurally and substantively

27 unconscionable, rendering it unenforceable.” FAC ¶¶ 115, 123. Not so. The Limited Warranty is

1 the front of the Guide and appears on the first page of information after the company profile page.

2 See id. at 4-6. The Simpson website contains the language in bold on the Limited Warranty page.

3 Website at 31. And Plaintiffs’ assertion is undercut by the fact that they themselves cite to and

4 rely on other portions of the Limited Warranty and don’t assert that those portions were

5 inconspicuous. Lastly, Plaintiffs’ allegations that the disclaimer was procedurally and

6 substantively unconscionable is conclusory and is entitled to no weight. See Tietsworth v. Sears,

7 Roebuck and Co., 720 F. Supp. 2d 1123, 1139 (N.D. Cal. 2010) (rejecting unconscionability

8 allegation where plaintiffs had failed to allege “facts demonstrating that there were no alternative

9 manufacturers of washers or that they were surprised by the terms of the warranty”). Plaintiffs

10 cannot plausibly allege claims of breach of implied warranties. See Pinellas Suncoast Transit

11 Auth. v. Mincom, Inc., 2007 WL 1222595, at *2 (M.D. Fla. Apr. 24, 2007) (finding that disclaimer

12 of implied warranties with similar language to Simpson’s disclaimer met the statutory

13 requirements as it was in writing and conspicuous, and dismissing with prejudice the breach of

14 implied warranty claim); Minkler v. Apple, Inc., 65 F. Supp. 3d 810, 819 (N.D. Cal. 2014)

15 (dismissing breach of implied warranty claims where disclaimer stated that company “disclaims

16 all statutory and implied warranties, including without limitation, warranties of merchantability

17 and fitness for a particular purpose and warranties against hidden or latent defects”).

18 Lastly, Simpson argues that the California Plaintiffs cannot assert warranty claims under

19 the California Song-Beverly Act (Cal. Civ. Code. §§ 1790, et seq.) (the “SBA”) because the

20 Products they purchased as part of their home were not “new.” Simpson is correct. “Consumer

21 goods” under the Act are defined as “any new product . . . that is used, bought, or leased for use

22 primarily for personal, family, or household purposes . . . .” Cal. Civ. Code § 1791(a) (emphasis

23 added). “[T]he only section of the act that applies to used goods is Section 1795.5, which . . .

24 creates obligations on behalf of ‘the distributor or retail seller making express warranties with

25 respect to used consumer goods (and not the original manufacturer . . . ).’” Johnson v. Nissan N.

26 Am., Inc., 272 F. Supp. 3d 1168, 1179 (N.D. Cal. 2017) (dismissing implied warranty claim

27 because the Song-Beverly Act did not create any obligation on behalf of the original car

1 manufacturer with respect to used goods).8 The California Plaintiffs cannot assert warranty claims

2 under the SBA.

3 5. Plaintiffs’ Negligence Claim

4 Plaintiffs’ negligence claim alleges the following:

5 Defendants breached their duty to Plaintiffs and Class Members by

not exercising reasonable care to avoid causing foreseeable risk of

6 harm to Plaintiffs and Class Members. Defendants carelessly

designed and manufactured a product that prematurely corrodes when

7 installed in homes even when selected and installed pursuant to

Simpson’s recommendations and instructions. Simpson did not take

8 sufficient action to reasonably provide notification to Plaintiffs and

Class Members of the Product’s propensity to prematurely corrode

9 and deteriorate.

10 FAC ¶ 128. Plaintiffs also allege that Simpson “failed to use reasonable care to warn about the

11 Product’s dangerous condition or about facts that made the Product likely to be dangerous and a

12 substantial safety risk.” Id. ¶ 130. This claim is, again, premised on Plaintiffs’ allegation that

13 Simpson’s products were defective. But they have not plausibly alleged that. Thus, they have not

14 plausibly alleged negligence.

15 Additionally, Simpson argues that Plaintiffs’ tort claims are barred by the economic loss

16 rule (“ELR”). “Simply stated, the economic loss rule provides: Where a purchaser’s expectations

17 in a sale are frustrated because the product he bought is not working properly, his remedy is said

18 to be in contract alone, for he has suffered only ‘economic’ losses.” Robinson Helicopter Co., Inc.

19 v. Dana Corp., 34 Cal. 4th 979, 988 (2004) (citations and internal quotation marks omitted). Put

20 another way, “the economic loss rule is a judicially created doctrine that sets forth the

21 circumstances under which a tort action is prohibited if the only damages suffered are economic

22 losses.” Tiara Condo. Ass’n v. Marsh & McLennan Cos., 110 So. 3d 399, 401 (Fla. 2013)

23 (citation omitted). “Economic loss consists of damages for inadequate value, costs of repair and

24 replacement of the defective product or consequent loss of profits—without any claim of personal

25 injury or damages to other property.” Robinson, 34 Cal. 4th at 988; Tiara, 110 So. 3d at 405. In

26

8 Simpson also argues that, “[e]ven if California law did apply to the Coopers’ and Fernandina’s

27

warranty claims, those claims would still fail for a number of reasons that Simpson raised in [its

1 both Florida and California, the ELR “expressly limit[s] tort liability with respect to defective

2 products to injury caused to persons or damage caused to property other than the defective product

3 itself.” Id.

4 Simpson argues that Plaintiffs do not allege that the Products have caused bodily injury or

5 physical damage to “other property,” that they only “allege potential damage that may occur to

6 their home[s] as a result of replacing the allegedly defective Product, that they may have paid less

7 for the Product, and that they may have not purchased their homes at all.” Mem. at 23 (citing

8 FAC ¶¶ 134, 141). Plaintiffs do not attempt to argue otherwise. With regard to the Fernandina

9 and California Plaintiffs’ homes, Simpson is correct that Plaintiffs have not even alleged damage

10 to anything other than the Product. They allege only speculative damage to their homes. See FAC

11 ¶¶ 19, 22. “The breach of a duty causing only speculative harm or the threat of future harm does

12 not normally suffice to create a cause of action.” Aas v. Superior Court, 24 Cal. 4th 627, 646

13 (2000) (“Construction defects that have not ripened into property damage, or at least into

14 involuntary out-of-pocket losses, do not comfortably fit the definition of appreciable harm --an

15 essential element of a negligence claim.”) (citations and internal quotations omitted).

16 With regard to the Cooper’s home, Plaintiffs allege that a hurricane hit the area of the

17 home and caused severe damage, and that the damage “would have otherwise been prevented had

18 the Production functioned as marketed.” Simpson argues that this allegation is of no consequence

19 because under Florida law “the Coopers’ home is considered inclusive of its component parts,

20 including the Products, and not ‘other property.’” Mem. at 23. Plaintiffs again do not argue this

21 point. The Court is persuaded by Simpson’s position. In Casa Clara Condominium Ass’n v.

22 Charley Toppino & Sons, 620 So. 2d 1244 (Fla. 1993), various homeowners sued a concrete

23 supplier corporation after defective concrete it supplied caused reinforcement steel in the concrete

24 to rust, crack, and break apart. The defective concrete caused damage to the homeowner’s

25 buildings. Id. at 1245. The homeowners argued that the concrete damaged “other” property

26 because “the individual components and items of building material, not the homes themselves, are

27 the products they purchased.” Id. at 1247. The Florida Supreme Court disagreed. The majority

1 Generally, house buyers have little or no interest in how or where the

individual components of a house are obtained. They are content to

2 let the builder produce the finished product, i.e., a house. These

homeowners bought finished products--dwellings--not the individual

3 components of those dwellings. They bargained for the finished

products, not their various components. The concrete became an

4 integral part of the finished product and, thus, did not injure “other”

property.

5

6 Id. Thus, the court held that the ELR applied to the purchase of the houses.9 See also City of St.

7 Petersburg v. Total Containment, Inc., 2008 U.S. Dist. LEXIS 106243, *55-56 (S.D. Fla.) (“The

8 economic loss doctrine is clear []: Plaintiffs may not recover in tort for damage to any part of an

9 integrated fuel storage and dispensing system” caused by defects in a fuel pump piping

10 component.); Fishman v. Boldt, 666 So. 2d 273, 274 (Fla. Dist. Ct. App. 1996) (the product

11 purchased by the plaintiff was a home with all its component parts, including the seawall, pool,

12 and patio, consequently, no “other property” was damaged when the seawall failed and the home,

13 pool, and patio were damaged); but see Saft Am., Inc. v. Jabil Circuit (Guangzhou), Ltd., 2019 WL

14 4600401, at *3 (M.D. Fla. Sept. 23, 2019) (examining cases for and against application of ELR

15 where a component leads to damage of an integrated product and finding the plaintiff’s allegations

16 of damage to other property sufficient to avoid application of the economic loss rule at the

17 pleadings stage). The ELR precludes Plaintiffs’ negligence claims.10 See Aprigliano v. Am.

18 Honda Motor Co., 979 F. Supp. 2d 1331, 1338 (S.D. Fla. 2013) (claim for negligent failure to

19 warn barred by the economic loss rule) (citing Barnext Offshore, Ltd. v. Ferretti Group USA, Inc.,

20

21

9 To the extent Tiara receded from Casa Clara, it did not do so with regard to this portion of the

opinion. See Saft Am., Inc. v. Jabil Circuit (Guangzhou), Ltd., 2019 WL 4600401, at *3 (M.D.

22

Fla. Sept. 23, 2019) (“While Tiara later receded from Casa Clara, it was only to the extent that

Casa Clara was being relied on to support the extension of the economic loss rule in

23

circumstances other than products liability.”).

10 While the court there didn’t apply the ELR on a motion to dismiss, it also didn’t rule out the

24

application of the ELR to that case. See 2019 WL 4600401, at *3, n. 6 (“While it may well turn

out that the economic loss rule applies in this case, the record needs to be developed concerning

25

the engineering, construction, and operation of the battery and its component parts to determine

how the battery and its components work, what went wrong here, and, ultimately, what it means

26

under the law.”). This Court is persuaded that the ELR does apply to this case. The cases Saft

Am. cited which found that, if a defective component is placed into a product the plaintiff can

27

show damage to “other property,” all came from federal district courts, which that court noted

1 2012 WL 1570057, at *4 (S.D. Fla. May 2, 2012)).

2

6. Plaintiffs’ Fraud Claim

3

Plaintiffs’ ninth cause of action is one for fraud or concealment. They allege that Simpson

4

concealed and suppressed material facts concerning the Product, namely “the inability of the

5

Product, even when selected and installed pursuant to Simpson’s guidelines and instructions, to

6

withstand environmental factors that cause premature corrosion.” Once again, Plaintiffs have not

7

plausibly alleged that any of Simpson’s products were defective or that Simpson concealed any

8

information from consumers. Thus, they have not plausibly alleged fraud or unlawful

9

concealment.

10

Simpson presumably intends its ELR argument to encompass Plaintiffs’ fraud claim as

11

well. However, the Florida Supreme Court in Tiara noted its past refusal to extend the application

12

of the ELR to actions based on fraudulent inducement, 110 So. 3d at 406 (citations omitted), and

13

Tiara didn’t change that. The court noted that it had allowed recovery in tort for economic

14

damages where the tort “requires proof of facts separate and distinct from the breach of contract.”

15

Id. at 402. Courts since Tiara have found the ELR inapplicable to claims of fraudulent

16

inducement. See, e.g., Global Quest, LLC v. Horizon Yachts, Inc., 849 F.3d 1022, 1031 (11th Cir.

17

2017) (fraudulent inducement claim not barred where fraud allegations were separate and distinct

18

from defendants’ performance under the contract); Wilson v. Volkswagen Grp. of Am., Inc., 2018

19

WL 4623539, at *10 (S.D. Fla. Sept. 26, 2018) (a claim for fraudulent inducement is excepted

20

from the ELR and should not be barred as a matter of course); In re MyFord Touch Consumer

21

Litig., 46 F. Supp. 3d 936, 965 (N.D. Cal. 2014) (applying Florida law and finding exceptions to

22

the economic loss doctrine include where there is fraudulent inducement and where there is a free-

23

standing statutory cause of action).11 In California also, “‘[t]he economic loss rule poses no

24

barrier to a properly pled fraudulent inducement claim: [I]t has long been the rule that where a

25

26

11 The Court notes Simpson’s point that “[a]t least four courts interpreting Tiara have rejected the

fraud exception to the ELR and held that it bars claims for fraudulent concealment in products

27

liability cases.” Mem. at 14 (citing Koski v. Carrier Corp., 347 F. Supp. 3d 1185, 1198 (S.D. Fla.

1 contract is secured by fraudulent representations, the injured party may elect to affirm the contract

2 and sue for fraud.’” Finney v. Ford Motor Co., 2018 WL 2552266, at *9 (N.D. Cal. June 4, 2018)

3 (quoting United Guar. Mortg. Indem. Co. v. Countrywide Fin. Corp., 660 F. Supp. 2d 1163, 1188

4 (C.D. Cal. 2009)) (citing several other cases). The ELR does not bar Plaintiffs’ fraud claim.

5 7. Plaintiffs’ UCL Claims

6 For Plaintiffs’ second and third causes of action, they allege that Defendants engaged in

7 unlawful (claim two) and unfair (claim three) business practices in violation of the California

8 unfair competition law.12 The unfair competition law “defines ‘unfair competition’ to include ‘any

9 unlawful, unfair or fraudulent business act or practice.’” Cel-Tech Communications, Inc. v. Los

10 Angeles Cellular Telephone Co., 20 Cal. 4th 163, 180 (1999) (quoting Cal. Bus. & Prof. Code §

11 17200). “‘[S]ection 17200 “borrows” violations of other laws and treats them as unlawful

12 practices’ that the unfair competition law makes independently actionable.” Id. (quoting State

13 Farm Fire & Casualty Co. v. Superior Court, 45 Cal. App. 4th 1093, 1103 (1996)). “A ‘violation

14 of another law is a predicate for stating a cause of action under the UCL’s unlawful prong.’”

15 Graham v. Bank of America, N.A., 226 Cal. App. 4th 594, 610 (2014) (quoting Berryman v. Merit

16 Property Management, Inc., 152 Cal.App.4th 1544, 1554 (2007)). “The unfair competition law

17 thus creates an independent action when a business practice violates some other law.” Walker v.

18 Countrywide Home Loans, Inc., 98 Cal. App. 4th 1158, 1170 (2002) (citing Farmers Ins.

19 Exchange v. Superior Court, 2 Cal. 4th 377, 383 (1992)). Under their unlawful business practice

20 claim, Plaintiffs allege that: “Defendants engaged in unlawful business practices in that they

21 created and sold a defective Product that prematurely fails due to poor design; failed to disclose

22 material facts concerning the Product’s safety; failed to disseminate information known to them

23 about the Product’s defect; impliedly warranted to Plaintiffs and Class members that the Product

24 was required for a particular purpose; impliedly warranted that the Product was merchantable;

25 failed to adequately warn Plaintiffs and Class Members of the Product’s defect; negligently

26 designed and manufactured the Product; and concealed and suppressed material facts concerning

27

1 the Product.” FAC ¶ 80. Under their unfair business practice claim, they allege that Simpson

2 “fail[ed] to disclose material safety facts concerning the Product that they had a duty to disclose.”

3 Id. ¶ 84. These causes of action depend on the other claims, which for reasons already explained,

4 all fail. Thus, like Plaintiffs’ other claims, these claims fail.

5 8. Simpson’s Statutes of Limitation Argument

6 Simpson alleges that all of Plaintiffs’ claims are barred by statutes of limitations. “Under

7 Florida law, a cause of action accrues when the last element of the cause of action occurred or, in

8 the case of fraud-based claims, when the plaintiff either knows or should know that the last

9 element of the cause of action occurred.” Z-Rock Communs. Corp. v. William A. Exline, Inc.,

10 2004 U.S. Dist. LEXIS 15807, at *22-23 (N.D. Cal. Aug. 6, 2004) (citing Davis v. Monahan, 832

11 So. 2d 708, 709 (Fla. 2002)). California applies a similar “delayed discovery” rule. Fox v.

12 Ethicon Endo- Surgery, Inc., 35 Cal. 4th 797, 807-808 (2005) (“The discovery rule only delays

13 accrual until the plaintiff has, or should have, inquiry notice of the cause of action.”). Simpson

14 alleges that no delayed discovery rule can be applicable here because Plaintiffs have not alleged

15 delayed discovery. It argues that a plaintiff must allege when the fraud was discovered, the

16 circumstances under which it was discovered, why the plaintiff is not at fault for failing to

17 discover the fraud sooner, and that the plaintiff had not been put on inquiry notice. In California,

18 in order to establish fraudulent concealment so as to toll the statute of limitations, “the complaint

19 must show: (1) when the fraud was discovered; (2) the circumstances under which it was

20 discovered; and (3) that the plaintiff was not at fault for failing to discover it or had no actual or

21 presumptive knowledge of facts sufficient to put him on inquiry.” Baker v. Beech Aircraft Corp.,

22 39 Cal. App. 3d 315, 321 (1974) (citing Kimball v. Pacific Gas & Elec. Co., 220 Cal. 203, 215

23 (1934); see also Raifman v. Wachovia Secs, 649 Fed. Appx. 611, 613 (9th Cir. 2016) (“To take

24 advantage of the discovery rule, a plaintiff must ‘specifically plead facts to show (1) the time and

25 manner of discovery and (2) the inability to have made earlier discovery despite reasonable

26 diligence.’”) (quoting Grisham v. Philip Morris, USA, Inc., 40 Cal. 4th 623, 638 (2007)). Under

27 Florida law, “[i]n order to establish fraudulent concealment, plaintiff must allege and establish 1)

1 and 3) plaintiff exercised reasonable care and diligence in seeking to discover the facts that form

2 the basis of his claim.” Burr v. Philip Morris USA Inc., 2012 WL 5290164, at *3 (M.D. Fla. Sept.

3 || 28, 2012) (citing Berisford v. Jack Eckerd Corp., 667 So. 2d 809, 811 (Fla. Dist. Ct. App. 1995)).

4 || The Court found no Florida caselaw stating that a plaintiff seeking to toll a statute of limitations

5 || based on fraudulent concealment must plead when the fraud was discovered. But the requirement

6 || is inherent in the delayed discovery doctrine. “It is well established [] that when a limitations

7 period is tolled because of fraudulent concealment of facts, the tolling ceases when those facts are,

8 or should have been, discovered by the plaintiff.” Credit Suisse Sec. (USA) LLC v. Simmonds, 566

9 U.S. 221, 227 (2012) (citing 2 C. Corman, Limitation of Actions §9.7.1, pp. 55-57 (1991)).

10 || Without an allegation of when a plaintiff discovered facts forming the basis of an alleged fraud, a

11 court cannot know when the tolling stopped and thus, when the plaintiff pursued a cause of action

12 || diligently. Because Plaintiffs did not allege when they discovered the alleged fraud, they cannot

13 avail themselves of equitable tolling.

14 Vv. CONCLUSION

15 For the reasons stated above, the Court DISMISSES Plaintiffs’ First Amended Complaint.

a 16 Plaintiffs’ first (CLRA), second and third (UCL), fourth (FDUTPA), fifth (breach of express

3 17 warranty), and ninth (fraud) claims of action are dismissed with leave to amend.

18 Plaintiffs’ sixth (breach of warranty of fitness), seventh (breach of warranty of

19 merchantability), and eighth (negligence) claims are dismissed with prejudice. Additionally,

20 || Fernandina’s CLRA claim and the California Plaintiffs’ SBA claims are dismissed with prejudice.

21 These claims cannot be cured by amendment.

22 Plaintiffs shall file any amended complaint by June 16, 2020.

23 IT IS SO ORDERED.

24

25 Dated: May 19, 2020

26 7 LU \ - jy □

THOMAS S. HIXSON

27 United States Magistrate Judge

28