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TVI, Inc. v. Harmony Enterprises, Inc.

United States District Court, W.D. Washington, Seattle

July 30, 2019

TVI, INC., a Washington corporation, Plaintiff,
v.
HARMONY ENTERPRISES, INC., a Minnesota corporation, Defendant.

          ORDER

          HONORABLE JOHN C. COUGHENOUR JUDGE

         This matter comes before the Court on Plaintiff's motion to amend its complaint (Dkt. No. 19) and Defendant's motion for partial summary judgment (Dkt. No. 22). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby DENIES Plaintiff's motion to amend (Dkt. No. 19) and DENIES Defendant's motion for partial summary judgment (Dkt. No. 22) as moot for the reasons explained herein.

         I. BACKGROUND

         Plaintiff is a global thrift retailer who purchases, resells, and recycles gently used clothing and other items. (Dkt. No. 20 at 1.) If clothing items remain unsold at Plaintiff's stores, Plaintiff uses balers to compress and compact the clothing into shipping containers for transport to and sale in developing countries. (Id.) Balers are used daily in all of Plaintiff's stores. (Id. at 2.) Defendant manufactures, markets, and sells balers. (Dkt. Nos. 1-2 at 2, 12 at 1.) Between 2013 and 2014, Plaintiff purchased 27 balers from Defendant, which Defendant installed in Plaintiff's stores. (Dkt. No. 20 at 2.)

         On October 3, 2017, a baler manufactured and installed by Defendant at Plaintiff's Mt. Vernon store (the “Mt. Vernon baler”) failed and “shot a large steel bolt across [Plaintiff's] production room where [Plaintiff's] employees were working.” (Id.) No. one was injured in the incident. (Id.) Plaintiff immediately notified Defendant and demanded that Defendant send a representative to inspect the Mt. Vernon baler, produce a detailed report of how the incident could have occurred, remove and dispose of the baler, and reimburse Plaintiff for the purchase and installation of a replacement baler. (Id. at 2, 8-15.) Plaintiff also demanded that Defendant inspect all other balers it had installed in Plaintiff's stores at Defendant's expense and produce a report on their stability and safety. (Id. at 8.)

         On October 9, Defendant offered to take the Mt. Vernon baler back to Minnesota for an evaluation and to give Plaintiff a report on the evaluation's findings. (Dkt. No. 20 at 17.)[1] On October 10, Plaintiff sent Defendant a letter titled, “Notice of Defect and Potential Claim of Indemnity, ” which set forth the alleged facts of the Mt. Vernon baler's failure and noted that the failure put Plaintiff's employees at risk of harm. (Id. at 31-32.) Plaintiff conditioned its relinquishing of the Mt. Vernon baler to Defendant on Defendant's production of a report as to the cause of the failure. (See id. at 2, 31.)

         The Mt. Vernon baler arrived at Defendant's Minnesota headquarters on October 19, 2017. (Dkt. No. 21 at 6, 9.) Defendant conducted a one- to two-hour inspection of the Mt. Vernon baler, during which it found unnecessary welds that contributed to the Mt. Vernon baler's failure. (Id. at 14-15, 25.) Defendant has since been unable to locate any notes from the inspection of the Mt. Vernon baler. (Id. at 12.)

         On November 30, 2017, a visual inspection of a baler manufactured and installed by Defendant at Plaintiff's Flagstaff, Arizona business location (the “Flagstaff baler”) revealed that the structural frame was unsound due to welding failures. (Dkt. No. 20 at 3, 34-39.) Plaintiff demanded that Defendant send a representative to inspect the Flagstaff baler, produce a detailed report of how the incident could have occurred, remove and dispose of the baler, and reimburse Plaintiff for the purchase and installation of a replacement baler. (Id. at 34-35.) Plaintiff also demanded that Defendant inspect all other balers it had installed in Plaintiff's stores at Defendant's expense and produce a report on their stability and safety. (Id.) On December 1, 2017, Plaintiff sent Defendant a letter titled “Second Notice of Defect and Potential Claim for Indemnity: Second Demand for Inspection, ” which set forth the alleged facts regarding the failure of the Flagstaff baler, stated that the failure put Plaintiff's employees at risk of harm, and reiterated Plaintiff's demands for reports on the failures of the Mt. Vernon baler and the Flagstaff baler. (Id. at 41-42.)

         Defendant did not provide Plaintiff with reports on the Mt. Vernon baler and Flagstaff baler's failures. (Id. at 3.)[2] Plaintiff eventually removed all of Defendant's balers from Plaintiff's stores after Defendant did not provide the desired reports or perform inspect the other balers Plaintiff had purchased. (Id.) On January 17, 2018, Plaintiff's counsel sent Defendant a letter reiterating Plaintiff's prior demands and formally requesting that a litigation hold be placed on material related to the Mt. Vernon and Flagstaff balers. (Id. at 44-46.)

         Defendant prepared a summary of its inspection of the Mt. Vernon baler in October or November 2017, which it shared with its counsel. (Dkt. No. 21 at 20-22.) Defendant did not share its summary with Plaintiff until Plaintiff brought this lawsuit. (Dkt. Nos. 20 at 4, 21 at 20- 22.) Defendant also did not notify Plaintiff that another of Defendant's balers had suffered a similar failure in 2017 until Defendant's Rule 30(b)(6) deposition. (Dkt. Nos. 20 at 4, 21 at 7.) In addition, although Defendant's Rule 30(b)(6) deponent stated that Defendant sent the Mt. Vernon baler to be scrapped in December 2017, Defendant's responses to Plaintiff's interrogatories indicate that it was picked up for scrapping in January or February 2018. (Id. at 19, 40, 61.) Defendant did not notify Plaintiff that the Mt. Vernon baler had been scrapped. (Id. at 29.)

         In September 2018, Plaintiff brought suit against Defendant in state court, alleging a variety of Washington state law claims arising from Defendant's allegedly dangerous and defective balers. (See generally Dkt. No. 1-2.) Pursuant to Washington Superior Court Civil Rule 44.1, Plaintiff's complaint notified Defendant “of its intent to recover punitive damages in accordance with Minnesota Law.” (Id. at 17.) On October 4, 2019, Defendant removed the case to this Court. (Dkt. No. 1.) Plaintiff now seeks leave to amend its complaint to assert a claim for punitive damages pursuant to Minnesota law. (Dkt. No. 19.) Defendant moves for partial summary judgment dismissing Plaintiff's proposed claim for punitive damages. (Dkt. No. 22.)

         II. DISCUSSION

         A. Motion to Amend Legal Standard

         Typically, a court will freely grant leave to amend a complaint in the absence of undue delay, bad faith, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, or futility of the amendment. See Fed. R. Civ. P. 15(a)(2); Foman v. Davis, 371 U.S. 178, 182 (1962). The Court has discretion to grant or deny a request to amend, but must provide justification when it denies a request. Foman, 371 U.S. at 182. ÔÇťAbsent prejudice, or a strong showing of any of the remaining . . . factors, there ...


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