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Gomez Packaging Corp v. Smith Terminal Warehouse Co.

November 14, 2011

GOMEZ PACKAGING CORP., PLAINTIFF,
v.
SMITH TERMINAL WAREHOUSE CO., INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Cecilia M. Altonaga United States District Judge

ORDER

THIS CAUSE comes before the Court upon Defendants, Smith Terminal Warehouse Co., Inc. ("Smith") and Frank Futernick's ("Futernick['s]") Motion to Dismiss Amended Complaint ("Motion") [ECF No. 44], filed on October 13, 2011. Plaintiff, Gomez Packaging Corp. ("Gomez"), filed a Complaint [ECF No. 1] on June 2, 2011, asserting four claims - breach of bailment against Smith, negligence against Smith, and two claims of negligent misrepresentation, each against both Smith and Futernick. Defendants filed a Motion to Dismiss Complaint and Alternative Motion for More Definite Statement [ECF No. 22] on July 25, 2011. Defendants sought dismissal of the Complaint under Federal Rules of Civil Procedure 12(b)(6) and 12(b)(7), or alternatively a more definite statement of Plaintiff's claims under Rule 12(e). The Court issued an Order ("September 12 Order") [ECF No. 36] granting Defendants' motion in part, with leave to amend the Complaint. Plaintiff filed an Amended Complaint [ECF No. 38] on September 23, 2011, and Defendants bring the instant Motion seeking to dismiss the Amended Complaint pursuant to Rules 12(b)(6), 12(b)(7), and 19. (See Mot. 1). Plaintiff filed a Response to the Motion ("Response") [ECF No. 51] on October 31, 2011. Defendants filed a Reply [ECF No. 56] on November 10, 2011.The Court has carefully considered the parties' written submissions and the applicable law.

I. BACKGROUND*fn1

Gomez, a New Jersey corporation, is in the business of manufacturing sterile and non-sterile hygiene and health care products ordered by customers and for sale in the retail and wholesale market. (See Am. Compl. ¶ 1). Smith, a Florida corporation, is in the business of warehousing materials and goods in a warehouse in Miami. (See id. ¶ 2). Futernick, a Florida resident, was at all relevant times a director and officer in Smith and had a business address care of Smith's principal place of business in Miami. (See id. ¶ 3). Crown Consumer Brands, LLC ("Crown"), is an affiliate of Gomez whose interests in the outcome of this proceeding are represented and prosecuted by Gomez. (See id. ¶ 4). Crown, like Gomez, is in the business of manufacturing hygiene and health care products, including sterile products, for end-use customers. (See id. ¶ 8).

Gomez and Crown purchase raw materials in the United States or receive them from customers, store them in a Miami warehouse, and ship them off-shore for manufacture into finished goods. (See id. ¶ 9). Once manufactured, the finished goods are shipped back to Crown and Gomez. (See id.). It is critical for the Miami warehouse to be a "food grade" warehouse. (Id. ¶ 10). Federal regulations require such warehouses to be free of pests or other contaminants. (See id.).

On March 3, 2009, Gomez's Daniel Solomon ("Solomon") met with Futernick at the latter's office. (See id. ¶ 11). Solomon told Futernick he was interested in identifying a Miami warehouse to store health and hygiene products, including sterile products. (See id.). Solomon asked Futernick about Smith's pest control procedures, and Futernick represented that Smith's Miami warehouse was food-grade, and Smith had strict pest control policies in place. (See id.). In reliance on Futernick's statements, Gomez decided to store raw materials and finished goods at Smith's warehouse in Miami, both before and after off-shore manufacturing and production. (See id. ¶ 12). At all relevant times, Gomez has warehoused goods with Smith on behalf of itself and Crown, and neither Gomez nor Crown has warehoused goods in any Miami location other than Smith's warehouse. (See id. ¶¶ 13--14).

Each instance in which Gomez employed Smith's warehouse for storage was documented in a "non-negotiable warehouse receipt and invoice" ("Bailment Receipt(s)"). (Id. ¶ 15). Although some receipts contained language on the front referencing terms and conditions on the reverse side, all the receipts Gomez received from Smith were blank on the reverse side. (See id. ¶ 16). Smith did not otherwise inform Gomez of any conditions, restrictions or limitations to which Defendants' performance was subject. (See id. ¶ 17).

In December 2009, Crown transported to Smith's Miami warehouse over 500,000 linear yards of bristle and neck-bonded laminate material ("Toothbrush Raw Material") for use in the manufacture of toothbrushes. (See id. ¶ 18). The Toothbrush Raw Material consisted of 149 slits of light blue material, 32 slits of dark blue material, and 102 slits of white material. (See id. ¶ 19). At some point, Kimberly-Clark Corporation ("K-C") also provided stretch bonded laminate bandage raw materials ("Bandage Raw Material") to Gomez to manufacture for K-C's end-use customer Johnson & Johnson ("J&J"). (See id. ¶ 21). The Bandage Raw Material was also stored at Smith's Miami warehouse. (See id.). The manufactured bandages stored at Smith's warehouse consisted of 356 cases of 1-inch bandages. (See id. ¶ 24). Gomez used the Bandage Raw Material to manufacture bandages off-shore, which were re-shipped care of the Smith Miami warehouse to Gomez's New Jersey warehouse, where they were re-palletized. (See id. ¶¶ 22--23, 25).

On various dates in mid to late 2010, Berkeley Contract Packaging, LLC ("Berkeley"), a vendor for J&J, transported bandages from Gomez's New Jersey warehouse to Berkeley's New Jersey facility. (See id. ¶ 26). On November 22, 2010, Berkeley observed insects inside one of Gomez's shipments. (See id.). On December 7, 2010, J&J informed K-C by e-mail of this fact and concluded, based on the condition and location of the beetles and on a report for Berkeley by a pest service company, that the infestation occurred prior to Berkeley's pick-up. (See id. ¶ 27). J&J asked K-C to initiate an investigation. (See id.). Also on December 7, K-C forwarded the e-mail to Gomez, alerting Gomez for the first time that its product was infested. (See id. ¶ 28).

On December 8, 2010, Gomez had Orkin Pest Control ("Orkin") inspect its off-shore facilities. (See id. ¶ 29). Orkin found there was no infestation there, although raw material that had been transported from Smith's warehouse did contain dead beetles. (See id.). On December 10, 2010, Gomez e-mailed Futernick requesting "a formal pest control inspection" of the Miami warehouse "ASAP." (Id. ¶ 30). On December 13, 2010, Futernick responded, saying Smith had performed its own inspection and seen "no visible signs of any infestation," but that it increased the weekly fumigation to twice weekly "to ensure [Smith does not] have a problem." (Id. ¶ 31).

Gomez launched an investigation of its own facilities, which yielded the conclusion that there was no pest infestation during production or shipping of goods to Miami. (See id. ¶ 32). Nevertheless, in an abundance of caution and in reliance on Smith's representations, Gomez had its entire off-shore facility fumigated in December 2010. (See id. ¶ 33). On December 28, Orkin reported that following fumigation no beetles were discovered. (See id.). K-C's inspection of finished products not stored in Smith's Miami warehouse, carried out at significant expense to Gomez, revealed no infestation. (See id. ¶ 34). K-C also mandated that all Gomez bandage product arriving from off-shore be sent directly to New Jersey and subject to expensive inspection protocols, which Gomez did at its own expense. (See id. ¶ 35). Futernick's December 13, 2010 statements to Gomez were reiterated orally several times by Smith's Nelson Romero ("Romero") to Gomez's Jonathan Landes ("Landes") and Carla Bueno ("Bueno"), to the effect that Smith's warehouse was not a source of infestation. (See id. ¶ 36). In reliance on Futernick and Smith's representations, Gomez and Crown did not initiate a separate investigation into Smith's Miami warehouse. (See id. ¶ 37). At all relevant times, Gomez was aware Smith's customers stored raw materials and foodstuffs at Smith's warehouse. (See id. ¶ 38).

On March 8, 2011, Gomez discovered dead and live beetles in a shipment of bandages from Smith's Miami warehouse. (See id. ¶ 39). When inquiries were made of Smith, Smith maintained it had no infestation. (See id. ¶ 40). Gomez retained Orkin again, and on Orkin's advice Gomez closed its off-shore facility for three days and fumigated it. (See id. ¶ 41). Following the fumigation, on March 14, 2011, Orkin inspected the off-shore facility and determined there was no infestation. (See id.). Also on March 14, 2011, Gomez representatives personally inspected the Smith warehouse, where they discovered dead and live insects, including beetles, in various materials stored there. (See id. ¶ 42). Gomez requested that Smith tender its pest control reports for the warehouse. (See id. ¶ 43). In response, Smith tendered reports from February and March, neither of which indicated whether there was an infestation.

(See id.). The infestation at the Smith warehouse was "plain and clear to the naked eye." (Id. ¶ 44).

As of the March 14 inspection, Smith personnel no longer denied their warehouse was infested. (See id. ¶ 46). At no time, however, did Smith inform Gomez its warehouse was infested; rather Smith continued to accept Gomez's goods into its warehouse and invoice Gomez for warehousing services. (See id. ¶¶ 47--48). The March 14 inspection was the first time Gomez and Crown were aware of insect infestation at Smith's Miami warehouse. (See id. ¶ 49). By that date, all of Crown's raw material stored in Smith's warehouse was rendered worthless and a ...


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