United States District Court, N.D. Iowa, Eastern Division
FLOYD COUNTY MUTUAL INSURANCE ASSOCIATION a/s/o CLARK R. McGREGOR, RONALD R. McGREGOR REVOCABLE TRUST, and McGREGOR FARMS INC., Plaintiff,
CNH INDUSTRIAL AMERICA LLC, Defendant.
MEMORANDUM OPINION AND ORDER
WILLIAMS, UNITED STATES DISTRICT JUDGE
matter is before the Court on plaintiff's Motion to
Certify Order and for Stay of the Proceedings. (Doc. 18).
Defendant did not file a resistance. For the following
reasons, plaintiff's motion is denied.
alleges that it is an insurance company with its principal
place of business in Charles City, Iowa. (Doc. 17, at 2).
Plaintiff asserts that it issued an insurance policy to Clark
R. McGregor, the Ronald R. McGregor Revocable Trust, and
McGregor Farms Inc. (collectively, “McGregor”)
and that the policy covered a tractor manufactured by
defendant. (Id.). Plaintiff alleges that the tractor
started on fire while its insured was properly operating it
and the tractor was destroyed. (Id., at 3).
Plaintiff claims that under the terms of the policy it paid
McGregor $145, 000 for the tractor and $22, 787.81 for other
personal property in the tractor destroyed in the fire.
(Id.). Plaintiff asserts that it is subrogated to
all of McGregor's claims against defendant.
complaint included four counts against defendant: 1)
negligence; 2) breach of warranty; 3) strict liability; and
4) failure to warn. (Doc. 1, at 3-4). Defendant moved to
dismiss plaintiff's complaint for failure to state a
claim upon which relief can be granted under Federal Rule of
Civil Procedure 12(b)(6). (Doc. 6). Defendant moved to
dismiss Count II, the breach of warranty claim, because the
express warranty that accompanied McGregor's purchase of
the tractor conspicuously disclaimed all implied warranties,
and the express warranty expired before the fire. (Doc. 6, at
1). Plaintiff conceded that its warranty claims were barred
and agreed to the dismissal of Count II (Doc. 9, at 3). The
Court dismissed Count II with prejudice. (Doc. 16, at 2).
Counts I, III, and IV, defendant argued that Iowa's
economic loss doctrine (“ELD”), also known as the
“economic loss rule, ” barred plaintiff's
tort claims because plaintiff did not allege damages to
anything other than the tractor itself. (Doc. 6, at 2).
Plaintiff asserted that Iowa law recognizes a “[s]udden
and [d]angerous [e]xception” to the ELD. (Doc. 9, at
4-9). Plaintiff argued the purported sudden and dangerous
exception allows a plaintiff to bring product defect claims
in tort, even if there is no damage to other property, if the
defect resulted in a sudden and dangerous occurrence.
(Id.). Plaintiff also asserted that even it if was
required to plead damage to property other than the tractor,
it alleged such damage in the complaint. (Id., at
9-11). In the alternative, plaintiff moved for leave to amend
its complaint if the Court found that plaintiff was required
to plead damage to property other than the tractor and that
the complaint failed to do so. (Id., at 2 n.1, 10).
1, 2019, the Court issued its Order granting defendant's
Motion to Dismiss (“Order”). (Doc. 16). The Court
noted that “[t]he Iowa Supreme Court has consistently
held that Iowa's ELD bars recovery in tort when the
plaintiff has sustained purely economic damages.”
(Id., at 3 (citing Des Moines Flying Service,
Inc. v. Aerial Services Inc., 880 N.W.2d 212,
218 (Iowa 2016); Annett Holdings, Inc. v. Kum &
Go., 801 N.W.2d 499, 503 (Iowa 2011); Determan v.
Johnson, 613 N.W.2d 259, 261-62 (Iowa 2000))). The Court
explained that Iowa courts apply a multi-factor test to
determine if a claim sounds in contract or tort, but there
must be damages which extend beyond the product itself for a
product defect claim to sound in tort. (Id., at 4
(citing Determan, 613 N.W.2d at 262)). The Court
held that the complaint only alleged damage to the tractor,
and thus the ELD barred plaintiff's tort claims.
(Id., at 4-5).
Court then addressed whether Iowa law recognizes a sudden and
dangerous exception to the ELD separate from the multi-factor
test. (Id., at 5). The Court pointed out that it
previously rejected an identical argument in Conveyor Co.
v. Sunsource Technology Services Inc., 398 F.Supp.2d 992
(N.D. Iowa 2005). (Id.). The Court quoted
Conveyor's finding that there is “no
suggestion in Iowa cases that a ‘sudden or dangerous
occurrence,' standing alone, will transform what is
otherwise a contract or breach of warranty claim into a
strict product liability claim, in the absence of personal
injury or property damage extending beyond damage to the
product itself.” (Id. (quoting Conveyor
Co., 398 F.Supp.2d at 1011)). The Court granted
defendant's Motion to Dismiss as to plaintiff's tort
claims, but granted plaintiff leave to amend to assert damage
to property other than the tractor. (Id., at 6).
12, 2019, plaintiff filed its Amended Complaint which
reasserts plaintiff's claims for negligence, strict
liability, and failure to warn. (Doc. 17, at 3-4). The
Amended Complaint alleges that plaintiff paid McGregor $145,
000 for the tractor and $22, 787.81 for other personal
property in the tractor that was destroyed in the fire.
(Id., at 3). Plaintiff also filed its motion
requesting that the Court certify the Order for interlocutory
appeal under Title 28, United States Code, Section 1292(b).
(Doc. 18, at 1). Plaintiff seeks an interlocutory appeal of
the Court's holdings that Iowa has not adopted a separate
sudden and dangerous exception to the ELD, and that
accordingly plaintiff is required to plead damage to property
other than the tractor to assert tort claims. (Id.,
at 2). On July 26, 2019, defendant filed its answer to
plaintiff's Amended Complaint. (Doc. 23). Defendant's
answer asserted several affirmative defenses, including the
ELD, but defendant does not assert that the Court lacks
subject matter jurisdiction over plaintiff's claims.
(Id., at 5-6).
order dismissing some but not all claims is not final and not
immediately appealable. Such an order may be appealed,
however, if certain conditions enumerated in . . . 28 U.S.C.
§ 1292(b) have been met.” Mathers v.
Wright, 636 F.3d 396, 398 (8th Cir. 2011) (internal
citation omitted). Under Section 1292(b), a district court
may certify an order for interlocutory appeal when:
“(1) the order involves a controlling question of law;
(2) there is substantial ground for difference of opinion;
and (3) certification will materially advance the ultimate
termination of the litigation.” Union Cty., Iowa v.
Piper Jaffray & Co., 525 F.3d 643, 646 (8th Cir.
2008) (quoting White v. Nix, 43 F.3d 374, 377 (8th
Cir.1994)). For certification to be appropriate each of the
three criteria must be satisfied, and each criterion requires
a separate inquiry. Quality Office Furnishings, Inc. v.
Allsteel, Inc., No. 3:17-cv-00041-JEG, 2018 WL 7077066,
at *10 (S.D. Iowa Dec. 18, 2018) (citing In re Facebook,
Inc., IPO Sec. & Derivative Litig., 986 F.Supp.2d
428, 479 (S.D.N.Y. 2013); Sacchi v. Verizon Online
LLC, No. 14-CV-423 RA, 2015 WL 1729796, at *2 (S.D.N.Y.
Apr. 14, 2015)).
1292(b) should and will be used only in exceptional cases
where a decision on appeal may avoid protracted and expensive
litigation, as in antitrust and similar protracted
cases.” White, 43 F.3d at 376 (citation and
internal quotation marks omitted). “A motion for
certification must be granted sparingly, and the movant bears
the heavy burden of demonstrating that the case is an
exceptional one in which immediate appeal is
warranted.” Id. Certification under Section
1292(b) is within the Court's discretion. De Dios v.
Indem. Ins. Co. of N. Am., No. C ...