Grande et al v. Knauf Gips, KG et al, No. 4:2021cv03287 - Document 83 (S.D. Tex. 2022)
Court Description: MEMORANDUM AND ORDER granting 75 -2 Defendant's Motion for Summary Judgment as to plaintiffs' Texas Deceptive Trade Practices Act claim and plaintiffs' claim for punitive damages. Plaintiffs shall take nothing on these claims. Defendant's 75 -2 Motion for Summary Judgment is otherwise denied. (Signed by Judge Ewing Werlein, Jr) Parties notified.(gclair, 4)
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Grande et al v. Knauf Gips, KG et al Doc. 83 Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 1 of 14 United States District Court Southern District of Texas ENTERED IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION FRANK GRANDE, SUZAN GRANDE, and§ CJ PROPERTIES § § aintiffs, § § v. § § KNAUF GIPS KG AND KNAUF NEW § BUILDING SYSTEM (TIANJIN) CO. § LTD. (f/k/a KNAUF PLASTERBOARD § (TIANJIN) CO., LTD.), § § § Defendants. November 08, 2022 Nathan Ochsner, Clerk Civil Action No. H-21-3287 MEMORANDUM AND ORDER Pending is Defendants' Motion for Summary Judgment No. 75 2) ("Motion"). and appl le law, After considering the parties' Background fective drywall case that came to this Court after pretrial proceedings were conducted in MDL 2047, Manufactured Plaintiffs submissions Court orders as follows. I . This is a (Document Drywall discovered Products that ility. 1 L drywall In Re: In manufactured Chinese- October and 2017, sold by Defendants Knauf Gips KG and Knauf New Building System (Tianjin) Co. Ltd. 1 (f/k/a Knauf Plasterboard See Document No. (Tianjin) Co., Ltd.) had 66 (discussing the procedural history). Dockets.Justia.com Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 2 of 14 used in construction of an investment property they purchased "AS IS" in a foreclosure sale in January 2016. 2 According to Plaintiffs, the drywall used in building the home a decade earlier was defectively designed, manufactured, and sold by Defendants. 3 Components in the drywall would react, break down, sulfur compounds and other noxious gasses. In 2018, Defendants.s liability, and Plaintiffs joined Plaintiffs' case, breach of warranty, violation of the Texas an 4 Alabama alleging nuisance, Deceptive lawsuit lived Nonetheless, in the home, Plaintiffs and claim, the among against negligence, strict and unjust enrichment, Trade Practices severed and transferred to this Court for trial. never and release property other 6 Act was Plaintiffs have is things, unoccupied. 7 $225,000 in damages for the loss of the use and enjoyment of a home they never 2 Document No. 75-5, Document No. 75-4, Exhibit 2, Grande Deposition at 15:4-16:5, 20:8, 29:20-30:1; Exhibit 3, Supplemental Plaintiff Profile Form at CM/ECF pages 2 and 11 of 19. 3 Document No. 49, Sixth Amended Complaint at 11 12, 17, 27; Document No. 75-4, Exhibit 2, Grande Deposition at 48:8-19. 4 Id. See, e.g., E.D. La., No. Amended Complaint and Exhibit A. 2:09-md-0247, 5 6 Doc. 21334, Fifth Document No. 49, Sixth Amended Complaint at 11 23-92. Document No. 75 4, Exhibit 2, Grande Deposition at 29:3 30:23; Document No. 80-2, Exhibit B, Plaintiff Profile Form. 7 2 Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 3 of 14 intended to occupy, but rather intended to flip and sell. 8 Plaintiffs also claim a $220,000 diminution in property value, diminution greatly exceeding their $156,000 "AS IS" a purchase 9 price. Although the MDL Court denied Defendants' Motion for Summary Judgment, this Court granted Defendants' request to file the instant motion for summary judgment limited to three issues to be decided under Texas law, subsequent purchasers; Act; and (iii) whether namely, (ii) " ( i) rights of Plaintiffs as the Texas Deceptive Trade Practices Defendants may be subject to punitive damages under Texas law."10 II. Under Rule 56, the movant shows Standard "[t]he court shall grant summary judgment if that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 5 6 (a) . The party moving for summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those 8 Document No. 49, Sixth Amended Complaint at <Jl<Jl 20-21; Document No. 75-4, Exhibit 2, Grande Deposition at 29:3-30:23; Document No. 75-5, Exhibit 3, Supplemental Plaintiff Profile Form at CM/ECF page 6 of 19. 9 Id. 10 Document No. 68. 3 Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 4 of 14 portions the of interrogatories, affidavits, pleadings, and admissions 2548, 2553 on file, answers together to with the which it believes demonstrate the absence of if any, a genuine issue of material fact." S. Ct. depositions, (1986) Celotex Corp. v. Catrett, 106 (quotation marks omitted). The movant meets its initial burden by demonstrating "the absence of a genuine issue of material fact" and that it is entitled to judgment as a matter of law. (5th Cir. 1994) See Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (quoting Celotex, 106 S. Ct. at 2553). Once the movant carries this burden, the burden shifts to the nonmovant to "go beyond the pleadings and designate specific facts Id. showing that there is a genuine issue for trial." Celotex, 106 S. Ct. at 2553-54). ting "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record . . or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." 56(c)(l). also The court must consider the cited materials but may consider 56 (c) (3). other materials in the record. FED . R . CI v . P. "Rule 56 does not impose upon the district court a duty to sift through the party's FED. R. CIV. P. opposition record in search of evidence to support a to summary judgment." Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998) 4 Ragas v. Tenn. Gas (citation omitted); Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 5 of 14 see also Malacara v. Garber, ("When evidence exists in 353 F.3d 393, the summary 405 (5th Cir. judgment 2003) record but the nonmovant fails even to refer to it in the response to the motion for summary judgment, that evidence is not properly before the district court." (citing cases)). III. Discussion A. Subsequent Purchaser Claim Defendants' legal argument is that Plaintiffs' claims for damages to their property "are barred because the damage to the property occurred property." 11 did not before they acquired ownership of the It is Defendants' contention that because Plaintiffs receive an "express assignment of rights from the predecessor-in-interest who owned the property at the time it was damaged, . they have no right of action to sue for property damage caused by the allegedly defective drywall installed before they purchased the property. " 12 It is correct that "[t]he right to sue is a personal right that belongs to the person who owns the property at the time of the injury[.]" & Gas Co., 331 S.W.3d 419, 424 (Tex. Exxon Corp. v. Emerald Oil 2010) (citation omitted). That "right to sue does not pass to a subsequent purchaser of the 11 Document No. 75-2, Motion at 3. 12 Id. at 5. 5 Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 6 of 14 property unless there action. 11 Id. is an express assignment of the cause of Thus, absent an express assignment, subsequent purchasers do not have standing to recover for a legal injury to the property that occurred before purchase. Id. The determinative question thus becomes when did legal injury to the property occur, the property? inflicted when installed[.] 1113 Defendants have i.e., before or after Plaintiffs purchased Defendants' the Motion assumes the "allegedly legal defective injury was drywall [was] But that is not established in the case file and not shown that the genuine issue of material fact. answer does not involve a A legal injury "is neither the breach of a duty that gives rise to liability for the legal injury nor the damages that may be awarded as compensation for the legal injury. 11 Crosstex N. Tex. Pipeline, L.P. v. Gardiner, 505 S.W.3d 580, 594 (Tex. 2016) arise long after (citation omitted). the tortious act is Legal injury to land may committed. Ranchero Esperanza, Ltd. v. Marathon Oil Co., (Tex. App. --El Paso 2015, no pet.) Seer e.g., 488 S.W.3d 354, 360 (held, subsequent purchaser had standing to sue oil company for recovery of damages when oil well, plugged and abandoned 16 years before plaintiff purchased the land, began leaking salt water onto the surface of the land four years after the plaintiff purchased it. 13 Id. 6 "[B] efore a cause of action Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 7 of 14 accrues there must be--at a minimum--some injury, 'be the damage [T]here can be a delay between the wrongful however slight.' act and the first resulting injury and any cause of action does not accrue until the first injury occurs." (citing cases)); Haire v. Nathan Watson Co., 221 S.W.3d 293, 297 98 (Tex. App.- Fort Worth 2007, no pet.) (although denied relief on other grounds, plaintiffs had standing to sue for structural problems that did not begin until several months after they purchased their home from an intermediate owner); cf. Exxon Corp., 331 S.W.3d at 424-25 (citing Vann v. (Tex. Bowie Sewerage Co., 1936) as 127 Tex. "holding that a 97, 90 S. W. 2d 561, 562 63 cause of action for damages to property resulting from a permanent nuisance accrues to the owner of the land at the time the injury begins to affect the land"). As observed above, a movant "always bears the initial responsibility of informing the district court of the basis for its motion, and depositions, identifying those portions answers to interrogatories, of the pleadings, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Ct. at 2553. argue that Defendants have failed to do so. a subsequent purchaser of Celotex, 106 S. To the extent they property does not have standing to sue without an assignment of rights· when the legal injury is not shown to have purchaser bought the property, occurred before the subsequent they are wrong on Texas law. 7 To Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 8 of 14 the extent they argue that the legal injury arose upon installation of the defective drywall or before Plaintiffs purchased the property, on this issue they have not demonstrated from the case filings and record "the absence of a genuine issue cf material fact." Celotex, 106 S. Ct. at 2553. Either way, Defendants have net made the requisite initial showing to obtain summary judgment as a matter cf law. B. The "AS IS" Defense Pushing beyond the three limited legal issues that they successfully requested leave of Court to raise in a motion fer summary judgment, Defendants also argue that the "AS IS" prevision in the Substitute Defendants are Trustee's neither beneficiaries. They substitute trustee. Deed parties to likewise bars the are not Plaintiffs' deed, nor in recovery. third privity party with the Nonetheless, Defendants rely upon the deed's "AS IS" provision to argue that Plaintiffs' claims for damages are barred. Defendants cite no authority to authorize Defendants, who are unrelated foreclosure product deed, manufacturers to invoke and the total strangers foreclosure deed's to the "AS IS" prevision to avoid liability for latent product defects, and this Court has found none. See, e.g., Haire, 221 S.W.3d at 301 (rejecting defendants "as is" defense to a homebuyer's claims where 8 Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 9 of 14 the defendants were not parties to the "as is" sales contract and were not third party beneficiar s); Zbranek Custom Hornes, Ltd. v. Allbaugh, No. 03-14 00131-CV, 2015 WL 9436630, at *5 (Tex. App. Austin Dec. 2 3, 2015, pet. denied) (recognizing that an as-is clause in a lease did not foreclose a lessee's cause of action against the manufacturer or builder the thing leased); see also 49 • TEX. PRAC • , CONTRACT LAW § 496B crnt. d (1965) . 14 to the deed, C. § 10 . 4 3 . 6; RESTATEMENT (SECOND) OF TORTS The "AS IS" defense, made by a stranger ils. Plaintiffs' Texas DTPA Claim Defendants next move for summary judgment on Plaintiffs' claim under the Texas Deceptive Trade Practices Act ("DTPA"). The DTPA was created "to protect consumers in consumer transactions." Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 649 (Tex. 1996). that end, a" fendant's deceptive conduct must occur in connection with a consumer transaction" to be actionable under the DTPA. Accordingly, To Plaintiffs must show that Defendants' Id. deceptive act or practice was committed in connection with Plaintiffs' consumer 14 The sole case cited by Defendants was not a merit-based decision on is issue. There, the court did not reach the issue of whether a non-party could rely upon an "as is" clause because the issue had not been preserved. Wel wood v. Cypress Creek Estates, Inc., 205 S.W.3d 722, 729 (Tex. App.--Dallas 2006, no pet.) . 9 Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 10 of 14 transaction, i.e., the purchase of the property. Id. at 649-50, 652. Plaintiffs identify no deceptive act or practice committed in connection with Plaintiffs'. purchase of the property. Plaintiffs complain that Defendants' Instead, deceptive practice induced the homebuilder (not Plaintiffs) to purchase and use the product when it constructed the home in 2006. 15 violation was unrelated to Because the alleged DTPA Plaintiffs' foreclosure Plaintiffs have no cognizable claim under the DTPA. Klein v. Marvin Lumber Cir. 2014) & (affirming purchase, Seer e.g., Cedar Co., 575 F. App'x 347, 348-49 (5th summary judgment against a subsequent homebuyer on his claims against a window manufacturer where there was no evidence that the manufacturer committed any deceptive act in connection with the subsequent home sale; the subsequent homebuyer identified no manufacturer representation he relied upon in deciding to buy the house from the seller); Todd v. Perry Homes, 156 S.W.3d 919, 922 (Tex. App.--Dallas 2005, no pet.) (affirming judgment for a homebuilder on a subsequent purchaser's DTPA claim because there was no evidence that the builder was connected to that subsequent purchase, no evidence that any representation by the builder reached the subsequent purchaser, and no evidence that 15 Document No. 80 at 8 9 ("Plaintiffs' homebuilder was induced to purchase Defendants' drywall product and use that product based entirely upon this deceptive act."). 10 Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 11 of 14 the builder bene PPG Indus., S.W.3d 79, ed from the subsequent transaction); Inc. 89, v. 91 JMB/Houston Ctrs. (Tex. Partners Ltd. 2004); Amstadt, see also P' ship, 919 S.W.2d at 649 52. Defendants are entitled to summary judgment on Plaintiffs' claim. D. 14 6 16 DTPA See id. Plainti ' Punitive Damage Claim Defendants further move for summary judgment on Plaintiffs' claim for punitive damages. In ass if ied as "exemplary damages.,, § 41.001(5). Texas, punitive TEX. CIV. PRAC. & damages REM. CODE ANN. Generally, "exemplary damages may be awarded only if the claimant proves by clear and convincing evidence that t with respect to which the c damages are results from: (1) harm imant seeks recovery of exemplary fraud; 16 (2) malice; or (3) gross Notably, Plaintif are not "consumers" under the DTPA in purchase of property in a foreclosure sale. Document No. 755, Exhibit 3, Supplemental Plaintiff Profile Form at CM/ECF pa 11 of 19) (Substitute Trustee's Deed conveying the "property to the purchaser at the purchaser's own sk, suant to the terms of Texas Property Code §§ 51. 002 and 51. 009"); TEX. PROP. CODE ANN. § 51. 009 ("A purchaser at a sa of real property under Section 51. 002: (1) acquires the foreclosed property 'as is' without any expressed or implied warranties, except as to warranties of title, and at the purchaser's own sk; and (2) is not a consumer."); 1 TEX. PRAC. GUIDE REAL ESTATE LITIG. § 4:143 ("A purchaser at a nonjudicial foreclosure sale under Texas Property Code §51.002 is not a consumer" under the DTPA and has no DTPA cla ) . Plaintiffs' DTPA claim would fail for this additional reason. 11 Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 12 of 14 negligence." Id. 41.003(a). 17 § "Malice" is defined as the "specific intent by the defendant to cause substantial injury or harm to the claimant." Id. § 41.001(7). "Gross negligence" is defined as an act or omission: (A) which when viewed objectively from the standpoint of the actor at the time of its occurrence involves an extreme degree of risk, considering the probability and magnitude of the potential harm to others; and (B) of which the actor has actual, subjective awareness of the risk involved, but nevertheless proceeds with conscious indifference to the rights, safety, or welfare of others. Id.§ 41.001(11). There are no allegations of fraud, malice, or gross negligence in Plaintiffs' Sixth Amended Complaint, and their response offers no argument as to how their meager evidence could support an award of exemplary damages under controlling Texas law. Plaintiffs attach a 2006 email recognizing that a problem with drywall had arisen in the United States, but there is no evidence that Defendants knew at that time that there was a problem with their drywall. 18 The email states: "Salomon is sure the problem is not Knauf drywall[.] 1119 A subsequent email asks for ideas on how to 17 Plaintiffs have identified no applicable statutory exception and have made no argument as to why they are exempt from proving fraud, malice, or gross negligence as a predicate for obtaining a punitive damages award. 18 Document No. 80-3, Exhibit C. 19 Id. 12 Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 13 of 14 resolve concerns and states that it "loo VERY nasty and expensive." 20 like it is going to get These two emails are insufficient to raise a genuine issue of material fact on fraud, malice, or gross negligence. Defendants are entitled to summary judgment on Plaintiffs' punitive damages claim. IV. For ORDERED Order foregoing reasons, that it is Motion Defendants' (Document No. 75-2) is GRANTED on Pl Practices Act c im and Plainti for ntif C im Summary Judgment 'Texas Deceptive Trade r punitiv~ damages, and Plaintiffs shall take nothing on these claims. Defendants' Motion for Summary Judgment is otherwise DENIED. Id. Plaintiffs also attach a business journal article in support of their claim, but the Court agrees that the article is inadmissible hearsay. aintiff s make no argument otherwise. Defendants' objection to Plaintiffs' Exhibit Dis sustained. See _J_a_m_e_s_v_._T_e_x_.__ C_o_l_l_i_n__ C_n_t..._y_., 5 3 5 F . 3 d 3 6 5 , 3 7 4 ( 5th Cir . 2 0 0 8 ) ( "Newspaper arti es, however, are not proper summary judgment evidence to prove the truth of the facts that they report because they are inadmissible hearsay. ") . 20 13 Case 4:21-cv-03287 Document 83 Filed on 11/08/22 in TXSD Page 14 of 14 The Clerk will enter this Order, providing a correct copy to all counsel of record. SIGNED at Houston, Texas, on this ca~y of November, 2022. LEIN, JR. DISTRICT JUDGE 14
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