Time-Cap Lab., Inc. v Spirit Pharm., L.L.C.
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Time-Cap Lab., Inc. v Spirit Pharm., L.L.C. 2012 NY Slip Op 31618(U) June 5, 2012 Sup Ct, Nassau County Docket Number: 21667/09 Judge: Anthony F. Marano Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SHORT FORM ORDER SUPREME COURT - STATE OF NEW YORK PRESENT: HON. ANTHONY F. MARANO Justice. TRIAL/IAS PART NASSAU COUNTY Time- Cap Laboratories, Inc. , Plaintiff, MOTION #005 INDEX # 21667/09 -againstSpirit Pharmaceuticals, L. Defendant. Spirit Pharmaceuticals, L. Third Party Plaintiff, -against- Reliable Products, Inc., Third Party Defendant Spirit Pharmaceuticals, L. Second Third Party Plaintiff -againstCytec Industries, Inc. Second Third Party Defendant ... . . . . . . . . . . . . . . . . . . . . . . .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [* 2] The following papers read on this motion: Notice of Motion Cross Motion ................................. X Reply. . Motion by Second Third Party Defendant Cytec Industries, Inc. pursuant to CPLR 3211 for an order dismissing the Second Third Party Complaint on the grounds that it fails to state a cause of action is granted in its entirety and the Second Third Cross-motion by Party Complaint is Defendant/ Second Third Party Plaintiff Spirit Pharmaceuticals, dismissed. L. L. C. to replead is denied. In the main action Time- Cap Laboratories, Inc. v. Spirit Pharmaceuticals, L. L. C. , plaintiff seeks to recover damages incurred in a product recall which was the result of alleged seeks indemnity negligence and breach of from third party defendant Reliable Products, Inc. and second Inc. third party defendant Cytec contract. Spirit Industries, Plaintiff Time- Cap contracted with defendant Spirit for the purchase of Docusate Sodium USP 85% / Sodium Benzoate 15% ( DSS ), a component element used by Time- Cap in the manufacture of a laxative product. Time- Cap alleges that the recall was necessitated by defective DSS which emitted a noxious odor. Spiri t alleges that second third party defendant Cytec used a spray drying process for the Ducosate Sodium which failed to abate its odor. Cytec has no contractual relation with any party in this action. It was engaged by non party Kal vik Laboratories, Ltd. located in India, which used the manufacture DSS. spray dried Docusate Sodium to Spirit alleges that if Spirit is liable to Time- Cap for product recall, then the seller the odor which caused the third party defendant Reliable, and the processor, second are obligated to indemnify. third party defendant Cytec, Time- Cap commenced this action in October of 2009 breach of asserting causes of action sounding in contract and products liability, later amended to include debt, [* 3] negligence, breaches of the warranty of merchantability and of fitness for a particular purpose. The following facts alleged in the Amended Verified Complaint must be accepted as true 84NY2d 83 (1994)). Time- Cap manufactures (Leon v. Martinez, pharmaceutical products, one of which is laxative product (the product). Pursuant to contract defendant Spirit Pharmaceuticals, L. L. C. supplied Time- Cap with Docusate a " raw material" used in the product. A number of Sodium Time- Cap customers complained that the laxative tablets emitted a noxious odor , resulting in a recall of the product. Time- Cap alleges that the cause of the noxious odor was the Docusate Sodium supplied by Spirit. Spirit commenced the third party actions consisting of the following relevant allegations. Spirit alleges that if TimeCap was caused to sustain damages then all such damages would have been caused or brought about by Reliable which placed the defective DSS product into the stream of commerce. Spirit also alleges that in or about 2007 Cytec " agreed to process a quantity of Docusate Sodium USP 85% /Sodium Benzoate 15% (the DSS)" for manufacturer Kalvik Laboratories, Private Limited. Spiri t alleges that Cytec knew or should have known that the DSS would be used in products intended for human consumption. Cytec moves to dismiss the Second Third Party Complaint and Spirit cross-moves to amend to assert a cause of action sounding in breach of express warranty and products wi th bills of lading and purchase orders concerning the subject DSS annexed. The bills of lading indicate that the shipper is non party manufacturer Kal vik Laboratories Ltd. and the consignee is third party defendant Reliable. Time- Cap vendor is Purchase Order P018043 indicates that Time- Cap product is DSS. The purchase order also defendant Spirit, the indicates that a " new version " of DSS was brought in for testing, viz. in "liquid form from Kalvik in India and then spray dried by Cytek Industries in the United States according to the pleadings and supporting papers, TimeCap purchased DSS from Spirit (vendor) and Reliable was the consignee " of shipments from India. Movant Cytek processed the product for Kal vik and had no contractual or other relationship with Reliable, Spirit or Time- Cap. liability, sum, On a motion to dismiss pursuant to CPLR 3211, the pleading facts as alleged true, and plaintiff is in the complaint are accepted as accorded the benefit of every possible favorable inference. The only determination is " whether the facts as alleged 84 NY2d within any cognizable legal theory (Leon v. Martinez, (1994) ). Here the claims against Cytec fail to 83, 87- is afforded a liberal construction, the fit 88 [* 4] state a cause of action in tort, contract or warranty by Spirit or Time- Cap. it is well settled that With regard to the tort claims one cannot recover in tort for direct or consequential damages resulting from product malfunction unless the defect (Niagara in the product created an unreasonable risk of harm 201 AD2d Mohawk Power Corp. v. Ferranti- Packard Transformers, Dept1994)). Accordingly, Spirit fails to state a 902, 903 cause of action in negligence, as there is no claim that the odor created an unreasonable risk of harm. The proposed claim in products liability is precluded by Schiavone Construction Co. v. (56 NY2d 667 (1982). New York does not Elgood Mayo Corp. permi t cause of action based on strict products liability against a remote manufacturer who made no representations to plaintiffs, who had no privity of contract with and where the only claim by plaintiffs is that product failed to function properly and resulted in economic loss to Schiavone Const. Co. v. Elgood Mayo Corp. plaintiffs Plaintiff and defendant/third party plaintiff do not supra). that DSS is unduly dangerous, an exception to the and all that is claimed is that the product Schiavone itself was unsatisfactory because of an odor and thus caused the seller to incur costs of recall and consequential the economic loss doctrine of plaintiffs, allege rule, economic loss. when considering imposing products In Schiavone, liability in the absence of personal injury or property damage Justice Silverman stated the rationale in a dissent which was adopted by the unanimously at the Court of Appeals: We think the economic ramifications of permitting a cause of action against the manufacturer are so extensive and unforeseeable that it is better for the courts not to extend strict products liability to this area, leaving the owner of the product to its remedy based on its contract with the seller, and likewise leaving the seller to its remedies against the person from whom it bought the equipment based upon the contract between those parties. . There is room in the market for goods of varying quality, and if the purchaser buys goods which turn out to be below its expectations, its remedy should be against the person from whom it bought the goods, based upon the contract with that person. [* 5] 81 AD2d 221, (Schiavone Const. Co. v. Elgood Mayo Corp, 56 NY2d 667 (1982) for the reasons stated in the 227- 234 , affd dissenting opinion of Justice Samuel J. Silverman at the " (i) n the case of Appellate Division). Stated another purely economic loss, there is no need to shift the loss to the manufacturer to be passed along to and shared by (Bellevue South Associates v. HRH Const. Corp., 78 consumers" way, all NY2d 282, 293 (1991)). To determine whether the claim falls within the exception risk of harm analysis focuses on several Schiavone, to factors, including " the nature of the defect, type of risk, (Bellevue S. Assoc. v and manner in which the inj ury occurred" HRH Constr. Corp. 78 NY2d 282, 293 (NY 1991)). Here no risk of injury is raised, merely an offensive odor which the drying process failed to remove from the Ducosate Sodium.. As noted by Court of Appeals a case of " economic disappointment" where the " bargained- for consideration" has failed to meet the expectations of the purchaser " the remedy lies in contract- law theories such as express and implied warranties, through which a contracting party can recover the benefit of its bargain, not in a law doctrine that strictly assigns the loss to a remote (Bellevue manufacturer to be shared by all its customers supra at 294- 295). Accordingly, Assoc. v HRH Constr. based on the above, there are no causes of action in negligence or products liability to support a claim for tort- Corp., indemnification. Wi th respect to the claims in warranty, Spirit avers in the proposed amended second third party complaint that Cytec ' s website makes representations which constitute a sufficient basis for a claim in breach of express warranty and that " upon information and belief Cytec provided express written warranties to Kalvic " and that " upon information and relief II Thus the proposed Kal vik relied on Cytec ' s representations. amendment adds a cause of action in express warranty to the 2 - 315 - Implied original claims of implied warranty (see UCC 314 Implied Purpose; UCC Warranty: Fitness for Particular Warranty: Merchantability). The proposed second third party complaint fails to state a cause of action in either implied or express warranty. [* 6] There is no question that pri vi ty is no longer required for breach of an express warranty " where express representations were made by a manufacturer to induce reliance (Randy Kni twear, Inc. v. American by remote purchasers However, with respect 11 NY2d 5, 11 Cyanamid Co., there must be an allegation of reliance. Here , there is no allegation that any of the parties to this action were aware of product representations on Cytec ' s the purchase of the product. Indeed, they were discovered only after the lawsuit was commenced. such the alleged misrepresentations were not part of the bargain between the parties and cannot be relied upon as Davis Pub. Co., (see, CBS Inc. express warranties NY2d 496, 503 (1990)). to express warranty, (1962)). website prior to v. Ziff- Insofar as the new allegation of an express warranty to the non party manufacturer - there are no allegations that any of the parties to this action were aware of the purported warranties and thus they cannot establish reliance. The causes of action for breach of implied warranties require privity. Spirit, and the remaining parties, lack privity with Cytec. Spirit avers that privity is no longer required for breach of warranty - including implied warranty, (32 NY2d 330 (1973)). This reliance is misplaced as the privity requirement which was applied to only personal injury Codling v. Paglia abandoned in or property damage, or dangerous products, the sort of damage held that pursuant to Codling long associated with tort. theories of breach of express warranty and strict products liability " the manufacturer of a defective product is liable to any person injured or damaged if the defect was a substantial factor in bringing about his injury or damages relying on (Codling v. Paglia, Codling v. Paglia 32 NY2d 330 (1973)). Privity is still required for implied warranty where the damage is to the product itself, the sort of damage associated wi th contract, i. e., the loss of benefit of the bargain and consequential damages. As Spirit is not in " pri vi ty with Cytec, has sustained " economic loss " only, it may not recover (Arthur Jaffee Assoc. on a claim of breach of implied warranty affd 58 NY2d 993 Serv., 89 AD2d 785, v. Bilsco Auto (1983) (" there being no privity between the purchaser and the The pri vi ty defendant there can be no implied warranty rule is still in effect, and Cytec is entitled to dismissal of any cause of action alleging breach of implied warranties as [* 7] .. ' ) . the essential element of contractual privity between the (Parker v. Raymond Corp., 87 clearly lacking AD3d 1115, 1116 (2d Dept 2011)). parties (i) s As the parties cannot support claims in contract, warranty or negligence against Cytec, the second third party action is dismissed. Q, Dated: 6/5/2012 ENTERED JUN 13 2012 NASSAU COUNTY COUNTY ClEItK'S OFFiCE ON
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