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Vigilant Insurance Co. v. Eemax

March 24, 2005

VIGILANT INSURANCE CO., A/S/O WILLIAMS & CONNOLLY, L.L.P, PLAINTIFF,
v.
EEMAX, INC. AND PVI INDUSTRIES, L.L.C., DEFENDANTS. EEMAX, INC., THIRD-PARTY PLAINTIFF,
v.
GENERAL ELECTRIC COMPANY ET AL., THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: John M. Facciola United States Magistrate Judge

MEMORANDUM ORDER

This case is before the court upon consent of the parties to trial before a United States Magistrate Judge. On February 4, 2005, I ordered the parties to brief the question of whether this court has jurisdiction over the third-party claims because the primary action has settled and diversity is lacking between the parties that remain in this case.

The primary action involved a suit by plaintiff Vigilant Insurance Company against defendants EEMAX, Inc. ("EEMAX") and PVI Industries, LLC for damages caused by the malfunction of an EEMAX water heater at the Williams & Connelly office building. In the thirdparty action, brought by third-party plaintiff EEMAX against third-party defendants General Electric Company et al. ("GE"), EEMAX blames GE's plastic resin for the alleged failure of other EEMAX water heaters manufactured between 1988 and 2003.

GE manufactures and sells plastic resin, including the resin at issue in this case, in pellet form. Years ago, GE sold thousands of pounds of pellets to Mohawk Tool & Die Manufacturing Company ("Mohawk"), which converted the pellets into molded parts. EEMAX then purchased the molded resin from Mohawk and incorporated it into its water heaters. According to EEMAX, many of these water heaters have failed to perform properly, and EEMAX alleges that the failures occurred because GE's resin was unsuitable for EEMAX's hot water application.

EEMAX cites two pieces of evidence to support its claims: (1) a letter dated October 25, 1988 from GE sales specialist, Patty O'Beirne ("O'Beirne"), to EEMAX's chief engineer at the time ("O'Beirne Letter"); and (2) two meetings involving EEMAX's current lead engineer, Edward Fabrizio ("Fabrizio"), and GE's customer representative, Frank Becker ("Becker"), that took place in 2000 and 2001. In the O'Beirne Letter, a GE sales specialist represents to EEMAX that GE's Noryl resin is especially noted for its hydrolitic stability, discusses the resin's performance in water and heated environments, and comments that the Noryl resin's low water absorption rate contributes to its dimensional stability. Twelve years after the O'Beirne Letter was sent to EEMAX, after learning that EEMAX's insurance policy was going to be canceled because of an increase in property damage claims, Fabrizio investigated the cause of the malfunctions and concluded that the problems were caused by leaks in the plastic housing bodies of the EEMAX water heaters. In an attempt to correct the leaking problem, Fabrizio met with a molder from Mohawk and GE's customer representative, Becker. EEMAX claims that Becker reassured EEMAX that GE's Noryl resin was appropriate for use in EEMAX's hot water applications and suggested ways-other than replacing the resin-to try to solve the problem. Based on this evidence, EEMAX brings claims against GE for breach of contract, indemnity, contribution, breach of warranty, fraud, misrepresentation, and negligence.

I. DISCUSSION

A. Legal Standards

Under federal statute, a district court may decline to exercise supplemental jurisdiction over a claim if:

(1) the claim raises a novel or complex issue of State law,

(2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction,

(3) the district court has dismissed all claims over which it has original jurisdiction, or

(4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.

28 U.S.C. § 1367(c).*fn1 The court has considerable discretion in determining whether to retain or decline supplemental jurisdiction. In making this determination, the court must weigh the following factors: (1) judicial economy, (2) convenience, (3) fairness, and (4) comity. Edmondson & Gallagher v. Alban Towers Tenants Ass'n, 48 F.3d 1260, 1266 (D.C. Cir. 1995) (citing United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966)).*fn2 "In the usual case in which all federal-law claims are eliminated before trial, the balance of factors to be considered under the [supplemental] jurisdiction doctrine-judicial economy, convenience, fairness, and comity-will point toward declining to exercise jurisdiction over the remaining state-law claims." Griffin v. Acacia Life Ins. Co.,151 F. Supp. 2d 78, 81 (D.D.C. 2001) (quoting Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7 (1988)). See also Gibbs, 383 U.S. at 726. These guidelines reflect the important underlying principle that federal courts should avoid entertaining ...


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