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Rodnite v. Hovnanian Enterprises

August 5, 2010

ANDREW RODNITE, ET AL., PLAINTIFFS,
v.
HOVNANIAN ENTERPRISES, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Lois H. Goodman United States Magistrate Judge

OPINION

Presently before the Court is a motion brought by Plaintiffs, Andrew and Ellen Rodnite, ("Plaintiffs"), seeking leave to file a Third Amended Complaint ("Third Amended Complaint" or "TAC"), adding counts against Defendant MI Windows & Doors Inc. ("MI Windows") for breach of warranty, strict liability and consumer fraud. [Docket Entry No. 81]. Plaintiffs also seek to expand the factual predicate of the complaint, and add MI Windows to the products liability count previously asserted against Defendants Hovnanian Enterprises, Inc., Hovnanian Homes, Inc., and Khovnanian at Little Egg Harbor, LLC (collectively, the "Hovnanian Defendants"). For the reasons set forth below, the Court denies Plaintiffs' request to amend to add causes of action for breach of warranty, strict liability, and consumer fraud against MI Windows. The Court grants Plaintiffs' request to amend the factual allegations, and also to amend Count Seven to assert a products liability claim against Defendant MI Windows.

I. Relevant Facts and Procedural History*fn1

Plaintiffs purchased a newly constructed home from the Hovnanian Defendants on or about May 29, 2007. TAC 1 at ¶10. Plaintiffs allege that their home was non-conforming in a number of ways. TAC at ¶¶ 20-25, 28. Of particular relevance to this motion, Plaintiffs allege that the exterior vinyl siding on their home "was warping, buckling and, in effect, literally melting, causing a failure of the exterior siding on the wall, apparently from heat generated as a result of solar reflection on the lower windows of the adjacent house . . . ." TAC at ¶ 25. Plaintiffs repeatedly complained of the problem of melted siding but allege that "[d]espite repeated demands by plaintiffs to defendants to effectively repair the damage to the vinyl exterior siding, defendants have through the filing of this action and thereafter taken no action to do so." TAC at ¶ 29. Plaintiffs later recognize that some of the damaged siding and a portion of the offending windows on the neighboring home have been replaced, but contend that this has not effectively solved the continuing problem presented by reflected solar energy. TAC at ¶¶ 65-66.

On or about July 30, 2008, Plaintiffs filed a complaint in federal court against the Hovnanian Defendants and individual Defendant John Carbone, based on diversity jurisdiction under 28 U.S.C. 1332. [Docket Entry No. 1]. The Hovnanian Defendants and John Carbone moved to dismiss counts 4 and 6 of the complaint and John Carbone as an individual defendant. [Docket Entry No. 30]. By Order dated September 9, 2009, the Court granted the motion to dismiss John Carbone as an individual defendant, and also dismissed counts 4 and 6. The Court further permitted Plaintiffs to amend the complaint. [Docket Entry No. 51].

On September 21, 2009, Plaintiffs filed the First Amended Complaint [Docket Entry No. 52], which for the first time identified MI Windows as a defendant. MI Windows filed a motion to dismiss. [Docket Entry No. 54]. In response, Plaintiffs filed a Second Amended Complaint, which was later stricken and re-filed as a Motion for Leave to File the Second Amended Complaint [Docket Entry Nos. 61, 66, and 83], which MI Windows opposed. [Docket Entry Nos. 67 and 68]. With regard to Plaintiffs' proposed Second Amended Complaint, this Court issued a Report and Recommendation [Docket Entry Nos. 71 and 72], an appeal of which was later converted into a motion for reconsideration [Docket Entry Nos. 75, 77]. The motion for reconsideration was rendered moot by Plaintiffs' Motion for Leave to File a Third Amended Complaint, which is currently before the Court. [Docket Entry No. 81].

The Court conducted a hearing on the motion for leave to amend on July 1, 2010. Prior to the hearing, the parties had already submitted considerable briefing on the issues raised, with regard to the motion to dismiss, the motion for leave to file the second amended complaint, and the present motion. See [Docket Entry Nos. 54, 55, 67-68, 75, 79, 81, 82, 84, 87, 88, 89, 90, 92, 94, 95, 96; see also Docket Entry No. 100, advising the Court of a recently decided case].*fn2 The prior briefing was incorporated by reference into this motion. See, e.g., Docket Entry No. 87 (MI Windows' Brief opposing leave to file the Third Amended Complaint, n. 1).

In the proposed Third Amended Complaint, Plaintiffs seek to elaborate on certain counts, including the products liability count (Seventh Count) insofar as it pertains to Defendant MI Windows, and to add counts against MI Windows for breach of warranty (Eighth Count), strict liability (Ninth Count), and consumer fraud (Eleventh Count). TAC at pp. 14-19. MI Windows has mounted a vigorous opposition to the motion, contending that the proposed amendments are futile and have been brought with undue delay. In addition, MI Windows argues that Plaintiffs cannot satisfy the minimum amount in controversy required to invoke diversity jurisdiction as to MI Windows. See [Docket Entry Nos. 68, 82, 87, and 89].

II. Standard of Review

Pursuant to Federal Rule 15(a)(1), a party has a limited time within which to amend its pleading once as a matter of course. After that, a party must either have consent from the opposing party or leave of court to amend a pleading. Fed. R. Civ. P. 15(a)(2). The Court, however, should give leave freely when justice so requires. Id.; Shane v. Fauver, 213 F.3d 113, 115 (3d Cir. 2000). In the absence of "undue delay, bad faith, dilatory motive, unfair prejudice, or futility of amendment," the amendment must be permitted. WHY ASAP, LLC v. Compact Power, 461 F. Supp. 2d 308, 311 (D.N.J. 2006) (quoting Grayson v. Mayview State Hosp., 293 F. 3d 103, 108 (3d Cir. 2002)).

An amendment that fails to state a claim upon which relief can be granted is futile. See In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997). The standards for denying leave to amend based on futility and granting a motion to dismiss under Fed. R. Civ. P. 12(b)(6) are identical. See In re Burlington Coat Factory Sec. Litig., supra, 114 F.3d at 1434; Massarsky v. General Motors Corp., 706 F.2d 111, 125 (3d Cir. 1983). In determining whether an amendment is indeed futile, the court "must accept as true all factual allegations contained in the proposed amended complaint and any reasonable inferences that can be drawn from them," Travelers Indem. Co. v. Dammann & Co., Inc., 592 F. Supp. 2d 752, 763 (D.N.J. 2008), but the court is "not compelled to accept unwarranted inferences, unsupported conclusions or legal conclusions disguised as factual allegations." Baraka v. McGreevey, 481 F.3d 187, 211 (3d Cir. 2007). Thus, a plaintiff's amendment "must plead sufficient factual matter accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 129 S.Ct. at 1949.

III. Analysis

A. Consumer Fraud Act, Strict Liability and Implied Warranty

MI Windows opposes Plaintiffs' proposed claim under the Consumer Fraud Act, N.J.S.A. 56:8-1, et seq. (the "CFA"), arguing that it is futile given that any CFA claim is subsumed by Plaintiffs' product liability claim. MI Windows further argues that Plaintiffs have not pled a consumer fraud claim with the particularity required under Federal Rule of ...


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