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From Products Liability Law Daily, May 7, 2015

Pella unable to avoid consumer claims over alleged defective windows

By Linda O’Brien, J.D., LL.M.

Three consumers alleged sufficient facts to pursue fraudulent omission claims under the state consumer fraud statute against window manufacturer Pella Corporation for allegedly concealing defects in certain windows for residential use, the federal district court in Charleston, South Carolina has ruled. However, the negligence claims were barred by the economic loss rule and certain breach of warranty claims were dismissed as time-barred (Wegner v. Pella Corp., May 5, 2015, Norton, D.).

Background. Consumers Craig Wegner, Ronald Siemens, and Brent Geetings each purchased windows manufactured by Pella in connection with their respective residential construction projects. Subsequently, the windows experienced water leakage. The consumers filed a putative class action complaint against Pella in an Iowa federal district court, alleging in part violations of the Iowa Consumer Fraud Act (ICFA) and Magnuson-Moss Warranty Act (MMWA). The consumers asserted that the windows were defective and Pella was aware or should have been aware of the defect. The case was transferred to South Carolina as part of the consolidated multidistrict litigation and Pella moved for dismissal.

ICFA. The court determined that the plaintiffs pleaded fraudulent omissions with sufficient particularity. Under Federal Rule of Civil Procedure Rule 9(b), the complaint must allege the “who, what, when, where and how of the alleged fraud,” the court explained. Although the complaint lacked facts as to affirmative misrepresentations, the plaintiffs adequately alleged that Pella was aware of the defect in the windows, concealed the defect from consumers, and the plaintiffs would have taken different action had they known about the defect.

However, the plaintiffs were unable to recover treble damages under the ICFA should they prevail on their claims. The court agreed with the defendant that the ICFA, which was enacted in 2009, could not be applied to conduct occurring before 2009 under the ex post facto clause of the U.S. and Iowa constitutions. Although the Act was contained in the state criminal code, the court found that the Iowa legislature intended the ICFA to implement civil proceedings for combatting fraud and not to impose punishment. The Act’s treble damages provision was punitive in nature and exceeded any amount necessary to compensate a consumer for any loss. Since the treble damages provision of the ICFA was so punitive as to transform the provision into a criminal penalty, it could not be applied for ex post facto purposes, the court noted.

Negligence claims. The economic loss rule applied to bar the negligence claims because there were no allegations that the harm suffered was a result of a sudden and dangerous occurrence. Instead, the losses were a result of the windows’ failure to perform as reasonably expected.

Statute of limitations. The statute of limitations did not bar Wegner and Siemens’ ICFA claims to the extent they were based on fraudulent concealment. According to the court, the two plaintiffs did not and were not required to plead in their complaint the date on which they discovered the alleged defects. Since the complaint did not allege facts sufficient to conclude that the statute of limitations had run on their claims, the motion to dismiss was denied. However, Geetings alleged that he noticed the defect in 2010 and, as of 2010, he was on notice of all facts that would have been disclosed by reasonable diligence. Since the action was filed more than two years later, Geetings’ ICFA was time-barred.

Breach of warranty. Additionally, the plaintiffs’ breach of express warranty and MMWA claims were time-barred to the extent they relied on warranties that the windows were free from defects. Under Iowa law, breach of warranty claims are subject to a five year statute of limitations and accrues upon delivery unless the warranty explicitly extends to future performance of the goods. Pella delivered Wegner’s windows in 2000, Geetings’ windows in 2003, and Siemen’s windows in 2005. In this case, Pella’s limited warranty allowed the repair or replacement of any defective parts or product within 10 years from the date of sale. In this case, the plaintiffs’ made no allegations that the limited warranty or any statements from Pella’s website or marketing materials explicitly extended to future performance, the court noted.

The plaintiffs also alleged that Pella did not sufficiently repair or replace the defective windows in their homes. Geetings and Siemens’ claims were not dismissed to the extent they relied on Pella’s failure to repair or replace the windows pursuant to the terms of the limited warranty. However, Wegner, who purchased the windows in 2000 and whose limited warranty expired in 2010, failed to allege that discovered any issues with the windows prior to 2012. His breach of express warranty and MMWA claims were dismissed since he did not submit a claim that would be covered by the limited warranty, the court found.

The case is No. 2:14-mn-00001-DCN.

Attorneys: Benjamin Granfield Arato (Law Office of Rob Tully) for Craig Wegner. John P. Mandler (Faegre, Baker Law Firm) for Pella Corp.

Companies: Pella Corp.

MainStory: TopStory DesignManufacturingNews DamagesNews BuildingConstructionNews SouthCarolinaNews

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