Ratcliff v. American Honda Motor Co., Inc. (2018)

Our plain-English summary of Ratcliff v. American Honda Motor Co., Inc. (U.S. District Court, Middle District of North Carolina, July 23, 2018).

Jody Ratcliff sued sixty-two defendants, alleging injury from exposure to asbestos-containing products in North Carolina between about 1985 and 2004. The opinion does not name her disease. A footnote says she was exposed to products from Ford and Hennessy as a third party at her father's worksites. She alleged that Ford's cars, brakes, clutches and gaskets, and Hennessy's brake grinding machines, exposed her to asbestos dust. Her complaint included a fraud count against every defendant. Ford and Hennessy moved to dismiss that count, and she filed more detailed statements in response. The magistrate judge was asked whether the fraud count was pleaded adequately. She found it was not. Ratcliff did not state the time, place or content of any false statement by either company, who made it, or that she relied on it. For fraudulent concealment, North Carolina law requires a relationship of trust or confidence creating a duty to speak, and none was alleged. The judge recommended dismissing the fraud count against Ford and Hennessy. Her negligence, warranty, products liability and punitive damages claims were not affected.

We wrote this summary from the court's opinion with the help of AI. It is not the court's wording, and it is not legal advice. The full opinion is below.

The decision

• Court: U.S. District Court, Middle District of North Carolina
• Decided: July 23, 2018
• Docket: Case No. 17CV174
• Stage: Motion to dismiss
• State: North Carolina

Outcome. The magistrate judge recommended granting Ford Motor Company's and Hennessy Industries' renewed motions and dismissing the fraud count (Count 8) against them, leaving the plaintiff's other claims in place.

What the court held. A fraud claim must plead the time, place and content of the misrepresentation with particularity. Under North Carolina law, fraudulent concealment also requires a relationship of trust or confidence creating a duty to disclose, which a plaintiff exposed to asbestos products as a third party did not allege.

The people and their exposure

• Jody E. Ratcliff (family member)

Who	Work	Where	When	Products
Jody E. Ratcliff	; worked near others using it	North Carolina	1985-2004	brakes, clutches and friction materials, gaskets and packing, Ford automobiles, brakes, clutches and gaskets
Jody E. Ratcliff	; worked near others using it	North Carolina	1985-2004	brakes, clutches and friction materials, Hennessy brake grinding machines

The defendants

• Ford Motor Company (manufacturer)
• Hennessy Industries Inc. (manufacturer)

The court's opinion

The text below is Google Scholar's copy of the court's opinion, a public record. Numbers in brackets, such as [*921], mark where each page of the printed reporter begins.

JODY E. RATCLIFF, Plaintiff,

v.

AMERICAN HONDA MOTOR CO, INC., etal., Defendants.

Case No. 17CV174.

July 23, 2018.

United States District Court, M.D. North Carolina.

JODY E. RATCLIFF, Plaintiff, represented by MONA LISA WALLACE, WALLACE AND GRAHAM, P.A., DARRON E.

BERQUIST, LANIER LAW FIRM, NAHID A. SHAIKH, LANIER LAW FIRM & WILLIAM MARC GRAHAM, WALLACE AND

GRAHAM, P.A.

AMERICAN HONDA MOTOR CO. INC., MITSUBISHI MOTORS NORTH AMERICA, INC., NAVISTAR INC., formerly known

as INTERNATIONAL TRUCK AND ENGINE CORPORATION, NISSAN NORTH AMERICA, INC. & TOYOTA MOTOR

SALES USA, INC, Defendants, represented by TRACY E. TOMLIN, NELSON MULLINS RILEY & SCARBOROUGH LLP.

AUTO GENERATOR & STARTER SERVICE INC., Defendant, represented by JOSEPH L. NELSON, DICKIE MCCAMEY &

CHILCOTE, P.C.

BARNES MOTOR & PARTS CO. INC., formerly known as BARNES MOTOR CO., GENUINE PARTS COMPANY &

NATIONAL AUTOMOTIVE PARTS ASSOCIATION, INC., Defendants, represented by SHANNON S. FRANKEL, YOUNG

MOORE AND HENDERSON, P.A., DAVID G. WILLIAMS, YOUNG MOORE & HENDERSON, P.A., HEATHER BELL

ADAMS, ALSTON & BIRD, LLP & MOLLY F. MARTINSON, YOUNG MOORE & HENDERSON, P.A.

BMW OF NORTH AMERICA, LLC, Defendant, represented by PATRICK JAMES CLEARY, BOWMAN AND BROOKE LLP.

BORGWARNER MORSE TEC LLC, Defendant, represented by DAVID L. LEVY, HEDRICK GARDNER KINCHELOE &

GAROFALO LLP.

BRENNTAG SPECIALTIES, INC., formerly known as WHITTAKER CLARK & DANIELS, INC., Defendant, represented by ROBERT O. MERIWETHER, NELSON MULLINS RILEY & SCARBOROUGH LLP, BENJAMIN S. CHESSON, NELSON

MULLINS RILEY & SCARBOROUGH LLP & TRACY E. TOMLIN, NELSON MULLINS RILEY & SCARBOROUGH LLP.

CONAGRA BRANDS INC., formerly known as INTERNATIONAL PLAYTEX INC., Defendant, represented by JOHN T.

HOLDEN, DICKIE MCCAMEY & CHILCOTE, P.C.

CONTINENTAL AUTOMOTIVE SYSTEMS, INC., formerly known as INTERNATIONAL PLAYTEX INC., CYPRUS AMAX

MINERALS COMPANY & IMERYS TALC AMERICA INC., formerly known as LUZENAC AMERICA INC., Defendants,

represented by TIMOTHY PECK, SMITH MOORE LEATHERWOOD LLP.

DAN WISE CHEVROLET INC., Defendant, represented by BRADY ALLEN YNTEMA, GOLDBERG SEGALLA, LLP, DAVID

LEONARD BROWN, GOLDBERG SEGALLA, LLP, ADDIE K.S. RIES, SMITH ANDERSON BLOUNT DORSETT MITCHELL

& JERNIGAN, L.L.P., CHRISTOPHER R. KIGER, SMITH ANDERSON BLOUNT DORSETT MITCHELL & JERNIGAN &

KIRK GIBSON WARNER, SMITH ANDERSON BLOUNT DORSETT MITCHELL & JERNIGAN.

DANA COMPANIES LLC, Defendant, represented by MOFFATT G. MCDONALD, HAYNSWORTH SINKLER BOYD, P.A.,

SCOTT E. FRICK, HAYNSWORTH SINKLER BOYD, P.A., W. DAVID CONNER, HAYNSWORTH SINKLER BOYD, P.A. &

CHRISTOPHER BARTON MAJOR, HAYNSWORTH SINKLER BOYD, P.A.

DOUG HENRY CHEVROLET BUICK GMC INC., formerly known as DOUG HENRY CHEVROLET BUICK PONTIAC GMC

INC., GENE TAYLOR INC., formerly known as GENE TAYLOR CHEVROLET-GMC INC., PAUL BENTON MOTORS OF

NORTH CAROLINA LLC, formerly known as GENE TAYLOR INC. & WINNER CHEVROLET INC., Defendants, represented by AMY C. DRAYTON, DEAN & GIBSON, PLLC, ADDIE K.S. RIES, SMITH ANDERSON BLOUNT DORSETT MITCHELL &

JERNIGAN, L.L.P., CHRISTOPHER R. KIGER, SMITH ANDERSON BLOUNT DORSETT MITCHELL & JERNIGAN & KIRK

GIBSON WARNER, SMITH ANDERSON BLOUNT DORSETT MITCHELL & JERNIGAN.

DOUG HENRY CHEVROLET INC., formerly known as DOUG HENRY CHEVROLET BUICK PONTIAC GMC INC.,

MASSEY MOTOR CO., SALE AUTO MALL INC., formerly known as POOLE BUICK CO. INC., SALE AUTOMOTIVE

GROUP INC. & SALE FORD LLC, Defendants, represented by AMY C. DRAYTON, DEAN & GIBSON, PLLC.

EDGEWELL PERSONAL CARE CO., As Subrogee Of PLAYTEX HOLDINGS INC., EDGEWELL PERSONAL CARE LLC,

As Subrogee Of PLAYTEX HOLDINGS INC., L'OREAL USA CREATIVE INC., As Subrogee Of MAYBELLINE COSMETICS

CORP., L'OREAL USA INC., formerly known as COSMAIR INC., MAYBELLINE LLC & PLAYTEX PRODUCTS LLC, As

Subrogee Of PLAYTEX HOLDINGS INC., Defendants, represented by NICHOLAS D. WILSON, GORDON & REES, LLP. FREMA MOTORS, INC., Defendant, represented by AMY C. DRAYTON, DEAN & GIBSON, PLLC, JUSTIN D. HOWARD,

MCGUIREWOODS LLP & TRACY S. DEMARCO, MCGUIREWOODS LLP.

FORD MOTOR COMPANY, Defendant, represented by KIRK GIBSON WARNER, SMITH ANDERSON BLOUNT DORSETT

MITCHELL & JERNIGAN, ADDIE K.S. RIES, SMITH ANDERSON BLOUNT DORSETT MITCHELL & JERNIGAN, L.L.P. &

CHRISTOPHER R. KIGER, SMITH ANDERSON BLOUNT DORSETT MITCHELL & JERNIGAN.

HENNESSY INDUSTRIES INC., Defendant, represented by JANICE HOLMES, GALLIVAN, WHITE & BOYD, P. A.

HONEYWELL INTERNATIONAL, INC., formerly known as THE BENDIX CORPORATION, Defendant, represented by

HARRY LEE DAVIS, JR., DAVIS & HAMRICK, L.L.P.

STANDARD MOTOR PRODUCTS INC., Defendant, represented by RONALD B. COX, PROFFITT & COX, LLP & ROBERT

DAVID PROFFITT, PROFFITT & COX, LLP.

TAMPBRANDS INC., Defendant, represented by DAVID G. HARRIS, II, GOLDBERG SEGALLA, LLP.

WHITTAKER CLARK & DANIELS, INC., Defendant, represented by ROBERT O. MERIWETHER, NELSON MULLINS

RILEY & SCARBOROUGH LLP & TRACY E. TOMLIN, NELSON MULLINS RILEY & SCARBOROUGH LLP.

MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES

MAGISTRATE JUDGE

JOI ELIZABETH PEAKE, Magistrate Judge.

This matter is before the Court on two Renewed Motions to Dismiss [Doc. #317, #318] filed by Hennessy Industries Inc.[1] and Ford Motor Company. For the reasons set out below, the Court will recommend granting the Motions to Dismiss. I. BACKGROUND

This action arises out of Plaintiff's allegations of injury due to exposure to asbestos-containing products. Plaintiff filed a twelve-count Complaint naming sixty-two defendants and alleging numerous counts of negligence, gross negligence, inadequate design, breach of warranty, product liability, premises liability, fraud, and conspiracy. Defendants Hennessy Industries Inc. ("Hennessy") and Ford Motor Company ("Ford") previously filed Motions [Doc. #69, #193] seeking the dismissal of Plaintiff's claim for Fraud/Fraudulent Representation (Count 8) pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). Because Plaintiff's initial response to these Motions relied upon matters outside the pleadings, and because Plaintiff alternatively requested leave to amend her Complaint, the Court allowed Plaintiff to file a More Definite Statement as to each moving defendant. Following that filing, Hennessy and Ford renewed their motions to dismiss. In the Complaint, the various defendants are, for the most part, grouped into large categories, such as the "Talc Defendants," the "Friction Defendants," and the "Talc Product Retailer Defendants" based upon their alleged involvement with asbestos. Ford is identified as one of 35 "Friction Defendants," and this grouping is defined as defendants who "mined, milled, processed, imported, converted, compounded, designed, manufactured, marketed, supplied, distributed, sold and/or otherwise placed in the stream of commerce automotive products, materials and/or equipment containing asbestos to which

Plaintiff was directly and indirectly exposed in North Carolina between 1985 and approximately 2004." (Complaint [Docket #1] at 6, n.5 and ¶ 9.) Specifically, Ford is alleged to have been "a designer, assembler, manufacturer, marketer, supplier, distributor and seller of asbestos-containing automobiles and automotive parts, including, without limitation, brakes, clutches and gaskets, to which Plaintiff was exposed between approximately 1985 and approximately 2004." (Compl. at ¶ 37.) Hennessy is not listed in a specific grouping, but is alleged to have "designed, manufactured, marketed, supplied, distributed, sold and otherwise placed into the stream of commerce automotive brake grinding machines that caused Plaintiff to be exposed to asbestos between approximately 1985 and approximately 2004," in that "[i]t was reasonably foreseeable that said brake grinding machines would be used in conjunction with asbestos brakes, and Hennessy designed and marketed its brake grinders for the sole or primary purpose of grinding brakes." (Compl. ¶ 40.) The Complaint largely consists of allegations that are intended to apply to every defendant collectively or to each defendant grouping, without distinction.[2]

As noted above, Plaintiff has filed More Definite Statements with respect to Hennessy [Doc. # 308-3] and Ford [Doc. # 308-2], and Hennessy and Ford have renewed their Motions to Dismiss.

II. DISCUSSION

A. Legal Standard

Under Rule 12(b)(6), a plaintiff fails to state a claim upon which relief may be granted when the complaint does not "contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Specifically, "[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the `grounds' of his `entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555 (citations omitted).

In addition, under Federal Rule of Civil Procedure 9(b), a party must plead with particularity the circumstances constituting fraud, including the time, place, and contents of the false representation, as well as the identity of the person making the representation and what he obtained thereby. Spaulding v. Wells Fargo Bank, N.A., 714 F.3d 769, 781 (4th Cir. 2013). In order to state a claim for fraud under North Carolina law, a plaintiff must allege a "(1) false representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which in fact does deceive, (5) resulting in damage to the injured party." Ricks v. Armstrong, 4:14CV37, 2014 WL 2587611, at [*1] (E.D.N.C. June 10, 2014) (internal quotation and brackets omitted); Forbis v. Neal, 649 S.E.2d 382, 387 (N.C. 2007). In the case of fraudulent concealment, the "plaintiff must additionally allege that all or some of the defendants had a duty to disclose material information to him as silence is fraudulent only when there is a duty to speak." Breeden v. Richmond Comty. Coll., 171 F.R.D. 189, 194 (M.D.N.C. 1997) (citations omitted). The special pleading requirements of fraud are applicable to fraudulent concealment claims, and while courts recognize that concealment or omission "is by its very nature, difficult to plead with particularity. . . [n]evertheless, these factors should be known by the time the complaint is filed, and must be stated with particularity to fairly apprise the defendant of the charges." Id. at 195 (internal quotation omitted). B. Plaintiff's Claims for Fraud

The Complaint alleges that Ford manufactured and distributed automobiles, and that Hennessy manufactured and distributed brake grinding machines, each causing Plaintiff to be exposed to asbestos between 1985 and 2004. (Complaint [Doc. #1] ¶¶ 37, 40). In Count 8 (Fraud/Misrepresentation), brought against all sixty-two defendants, Plaintiff alleges that the defendants "falsely represented facts, including the dangers of asbestos exposure, to Plaintiff, her family members and others. . . while [d]efendants each had actual knowledge of said dangers" and while each "knew of the falsity of their representations" or with reckless disregard of the falsity, and that Plaintiff relied upon these representations thereby causing injury. (Id. ¶¶ 219-222.) Plaintiff's fraud allegations were made against each of the 62 defendants without distinction. Plaintiff's More Definite Statement as to Ford [Doc. #308-2], alleges that Ford was aware of the dangers caused by exposure to asbestos (id. ¶¶ 269, 274-286, 288, 289, 292), that the brakes and clutches in cars manufactured by Ford generated asbestos dust, (id. ¶¶ 270-273), that customers were exposed to this dust at least to the extent they cleaned out

brake drums and assemblies using compressed air (id. ¶ 285), that at relevant times Ford was aware that exposure to asbestos caused mesothelioma (id. ¶¶ 283, 290, 292), and that despite this knowledge Ford "concealed this information, failed to warn users and continued to manufacture asbestos products" (id. ¶¶ 287, 290).

Plaintiff's More Definite Statement as to Hennessy [Doc. #308-3] alleges that Hennessy, or a predecessor, in the early 1950s developed a grinding device to grind brake linings on passenger cars (id. ¶¶ 295, 296), that the device was widely used to grind brake linings (id. ¶¶ 297, 299), which in turn created asbestos dust that could not be entirely collected by the grinder (id. ¶¶ 301, 302, 303, 307), that people near the machines could be exposed to the dust (id. ¶¶ 305, 312), that Hennessy was aware of the inherent danger in using their equipment but continued to sell the grinders (id. ¶¶ 308, 310, 325), but that at some point in or about 1986, because of the dangers created, it stopped selling its grinders in the United States (id. ¶¶ 315, 316) but made no efforts to contact prior customers to warn them (id. ¶ 316), and even continued to sell their grinders with stamps indicating that they met government standards knowing they did not (id. ¶ 319), and all of this was in "conscious and reckless disregard of public safety (id. ¶¶ 328, 329).

C. Sufficiency of Pleadings

Accepting these allegations as true, the basic elements of a claim for an affirmative fraudulent misrepresentation are missing. At best, Plaintiffs have pled that Ford and Hennessy were aware of the dangers of asbestos and that certain third-parties, such as workers or customers who worked on their own brake assemblies, could suffer injury if exposed to asbestos dust. Plaintiff does not allege the time, place and content of any misrepresentation by Ford or Hennessy to Plaintiff, identify who made that misrepresentation, when the representation was made, or allege that Plaintiff relied upon such representations to her detriment.

To the extent Plaintiff's allegations can be construed to include a claim for fraudulent concealment, aside from the deficiencies described above, the Complaint fails to meet the requirements of North Carolina law for establishing a duty to disclose. Relying upon Breeden, 171 F.R.D. at 194-95, Plaintiff argues that where parties are dealing at arms length and one party has knowledge of a latent defect which the other cannot discover through reasonable diligence, the law imposes a duty to disclose. (Plaintiff's Brief [Doc. #330] at 4; Plaintiff's Brief [Doc. #329] at 3-4 and 6.) However, Plaintiff has not alleged that she was in any type of arms-length dealings with Ford or Hennessy, nor has she alleged a fiduciary or other direct relationship that would create a duty to disclose under North Carolina law. See Breeden, 171 F.R.D. at 194, 196-198. North Carolina requires a relationship of trust or confidence to support finding a duty to disclose, based on a fiduciary relationship, a contractual relationship, or other similar relationship. Burnette v. Nicolet, Inc., 818 F.2d 1098, 1101 (4th Cir. 1986). A relationship between a manufacturer of asbestos and a plaintiff whose work involved the use of asbestos-containing products has been held to not meet this requirement. Id. at 1100-1101 ("The lower court found that North Carolina has never recognized a cause of action for fraudulent concealment in the absence of a relationship of trust or confidence created by a fiduciary, contractual or other similar relationship which imposes upon the defendant a `duty to speak' to the plaintiff. We see no error in the court's conclusion that North Carolina would not recognize a relationship of trust or confidence in the context advocated by Burnette." (internal citation omitted)); Simmons v. Amatex Corp. and Thompson v. ACandS, Inc., 806 F.2d 258, 1986 WL 18192 (4th Cir. 1986).[3] Plaintiff has not alleged facts supporting the existence of a relationship of trust or confidence that would create a duty to disclose to Plaintiff to support a claim for fraudulent concealment under North Carolina law. Breeden, 171 F.R.D. at 194-95, Burnette, 818 F.2d at 1101. Therefore, the Court will recommend that the Motions to Dismiss be granted and that Count 8 be dismissed as to Defendants Ford and Hennessy.

The Court notes that this determination would not affect Plaintiff's remaining claims, including the claims for negligence, breach of warranty, and products liability based on alleged failure to warn, as well as Plaintiff's claims for punitive damages based on alleged willful and wanton conduct. Those are separate claims which are not the subject of the Motions to Dismiss.

IT IS THEREFORE RECOMMENDED THAT the Renewed Motions to Dismiss Count 8 filed by Ford Motor Company [Doc. #317] and Hennessy Industries Inc. [Doc. #318] be GRANTED, and that Count 8 be dismissed as to Defendants Ford Motor Company and Hennessy Industries, Inc.

[1] Defendant Hennessy identifies itself as Hennessy Industries, LLC f/k/a Hennessy Industries, Inc.

[2] However, in Count 3, Plaintiff's alleges Hennessy "acted unreasonably in designing its brake grinders, without adequate dust collection, elimination or exposure prevention elements" that it knew, or likely knew, contained asbestos. (Id. ¶ 108.)

[3] Moreover, in the present case, the facts alleged are yet another step removed, as Plaintiff does not allege that she purchased or used a product from Ford or Hennessy, and instead alleges that she was exposed to their products as a third party at her father's worksites.

Sources

• The opinion on Google Scholar
• North Carolina asbestos laws
• North Carolina asbestos exposure sites