United States District Court, M.D. Florida, Jacksonville Division
TIMOTHY J. CORRIGAN UNITED STATES DISTRICT JUDGE.
motions before the Court present complex issues involving the
economic loss rule and personal jurisdiction. The Court's
review has been enhanced by the superior briefing of all
parties and was further aided by the oral argument on August
30, 2019, the record of which is incorporated by reference.
Saft America, Inc., (“Saft”), a subsidiary of
Saft Groupe, S.A., of France, manufactures batteries in
Jacksonville, Florida, for industrial and commercial use in
the United States and abroad. Saft purchased component
parts-busbar cards and power boards-for its EV-1 and EV-2
batteries from defendant Jabil Circuit (Guangzhou), Ltd., a
Chinese enterprise. For the busbar cards, Jabil purchased
certain subcomponent parts manufactured by Bourns, Inc., a
California corporation. Saft alleges the EV-2 components it
bought from Jabil (over 40, 000 of them) were defective and
ruined Saft's EV-2 batteries. Saft filed a complaint in
state court on February 13, 2018, bringing claims against
Jabil only for UCC breach of express warranty (Count I),
breach of implied warranty of merchantability (Count II),
breach of implied warranty of fitness for particular purpose
(Count III), and negligence/damage to other property (Count
IV). Jabil removed the case to federal court on diversity
grounds on April 3, 2018. Thereafter, Saft amended its
complaint to add Bourns as a defendant, naming it in a
negligence count (Count V) and in a joint and several
negligence count against both Bourns and Jabil (Count VI)
(Doc. 40), supported by allegations that the power resistor
subcomponents Bourns sold to Jabil were defective, and that
either the power resistors or the busbar cards or both caused
damage to Saft's EV-2 batteries.
filed an answer and a counterclaim (Doc. 44) (which Saft
answered (Doc. 46)) and Bourns filed a motion to dismiss
under Rule 12(b)(2) and (6) (Doc. 57), contending that
personal jurisdiction is lacking and the complaint fails to
state a claim against Bourns. Saft responded (Doc. 61),
Bourns replied (Doc. 65), and Saft filed a sur-reply (Doc.
73). The Court referred the motion to the assigned Magistrate
Judge for a Report and Recommendation. The Magistrate Judge
recommended that the motion to dismiss be granted,
determining that the economic loss rule barred the negligence
claims against Bourns (Doc. 85). Saft objected to the
Magistrate Judge's Report and Recommendation (Doc. 86)
and requested argument (Doc. 87). Bourns responded (Docs. 88,
89). In light of the Magistrate Judge's Report and
Recommendation, Jabil moved to dismiss the negligence counts
against it based on the economic loss rule (Doc.
91). Saft responded (Doc. 101). The Court
heard argument on August 30, 2019 and now issues its ruling.
moves to dismiss for lack of personal jurisdiction under
Federal Rule of Civil Procedure 12(b)(2), and both Bourns and
Jabil move to dismiss for failure to state a claim under Rule
12(b)(6). “In Florida, before a court addresses the
question of whether specific jurisdiction exists under the
long-arm statute, the court must determine ‘whether the
allegations of the complaint state a cause of
action.'” PVC Windoors, Inc. v. Babbitbay Beach
Const., N.V., 598 F.3d 802, 808 (11th Cir. 2010)
(quoting Wendt v. Horowitz, 822 So.2d 1252, 1260
(Fla. 2002)). Thus, the Court first addresses whether the
negligence allegations state a claim.
The Economic Loss Rule
economic loss rule is designed “to prohibit a party
from suing in tort for purely economic losses to a product or
object provided to another for consideration, the rationale
being that in those cases, contract principles are more
appropriate than tort principles for resolving economic loss
without an accompanying physical injury or property
damage.” Tiara Condo. Ass'n, Inc. v. Marsh
& McLennan Cos., Inc., 110 So.3d 399, 405 (Fla.
2013) (quotation and citations omitted). While a party cannot
sue in tort if the only damage is to the product itself, it
can maintain a cause of action if there is damage to
“other property.” Id. at 405-06.
issue here is whether Saft's battery is “other
property.” The answer is not so clear. Some of the
cases apply the “integration” or “component
part” analysis, finding that if a defective component
is integrated into a product, the product is not considered
“other property.” See, e.g.,
Turbomeca, S.A. v. French Aircraft Agency, Inc., 913
So.2d 714, 717 (Fla. 3d DCA 2005) (“Courts have refused
to bifurcate products into parts where a component part harms
or destroys the final product.”); Pycsa Panama,
S.A. v. Tensar Earth Techs., Inc., No. 06-20624-CIV,
2006 WL 8432715, at *5 (S.D. Fla. Dec. 20, 2006)
(“Florida law has long held that when a component part
harms or destroys a finished product, the finished product
does not satisfy the ‘other property'
exception.”) (citing Casa Clara Condo. Ass'n,
Inc. v. Charley Toppino & Sons, Inc., 620 So.2d 1244
(Fla. 1993) (building not separate from its defective
concrete), Turbomeca, 913 So.2d 714 (helicopter not
separate from its defective engine), Jarmco, Inc. v
Polygard, Inc., 668 So.2d 300 (Fla. 4th DCA 1996) (boat
not separate from defective boat resin), and Am. Univ.
Ins. Grp. v. Gen. Motors Corp., 578 So.2d 451 (Fla. 1st
DCA 1991) (engine not separate from its defective oil pump)).
See also Tyco Safety Prods. Can., Ltd. v. Abracon
Corp., No. 08-80604-CIV, 2008 WL 4753728, at *1-4 (S.D.
Fla. Oct. 28, 2008) (holding claim for damage to
plaintiff's smoke detectors into which defendant's
allegedly defective component parts were integrated was not
damage to other property).
still other cases focus on the product purchased, finding
that if a defective component is placed into the
plaintiff's own product, the plaintiff can show damage to
“other property.” See, e.g.,
Blackhawk Yachting, LLC v. Tognum Am., Inc., No.
12-14208-CIV-MARTINEZ, 2013 WL 12199875, at *5 (S.D. Fla.
Apr. 23, 2013) (holding plaintiff alleged damage to other
property when defective engine damaged plaintiff's
yacht's hull); Boracayan del Sur, S.A. v. Vidco
Indus. Inc., No. 05-21948-CIV-JORDAN, 2007 WL 9700684,
at *3 (S.D. Mar. 22, 2007) (holding plaintiff alleged damage
to other property when defective glass panels caused damage
to other parts of house); Ins. Co. of N. Am. v. Man
Engines & Components, Inc., No. 05-60699-CIV-ZLOCH,
2006 WL 8432178, at *2-5 (S.D. Fla. Jun. 27, 2006)
(explaining in admiralty case that parties' contract must
be viewed to determine whether the product damaged was part
of their bargain); Ice Fern Shipping Co., Ltd. v. Golten
Serv. Co., Inc., No. 1:04-cv-20741, 2005 WL 3692840, at
*3 (S.D. Fla. Mar. 22, 2005) (holding under admiralty law
that where parties' contract was for repair to
engine's speed regulator, damage to engine itself was
damage to other property).
these federal district court decisions are not binding here,
there is some support for this analysis from two key Florida
Supreme Court decisions. See Tiara, 110 So.3d at 405
(explaining that the economic loss rule “prohibit[s] a
party from suing in tort for purely economic losses to a
product or object provided to another for consideration
. . . .”) (emphasis added); Casa Clara, 620
So.2d at 1247 (“The character of a loss determines the
appropriate remedies, and, to determine the character of a
loss, one must look to the product purchased by the
plaintiff, not the product sold by the
defendant.”) (emphasis added). See also Salzedo
Office, LLC v. Facchina Constr. of Fla., LLC, No.
18-cv-21374-UU, 2019 WL 2105924, at *1-2 (S.D. Fla Feb. 28,
2019) (citing Casa Clara for the “product
purchased” language, and finding plaintiff alleged
damage to other property where defective windows caused
damage to the rest of the building plaintiff already owned
(as distinguished from Casa Clara, where the
plaintiffs purchased a whole house into which defective
drywall was integrated)).
Court evaluates a 12(b)(6) motion to dismiss construing the
complaint in the light most favorable to the plaintiff,
assuming the truth of the well-pled allegations. Dusek v.
JPMorgan Chase & Co., 832 F.3d 1243, 1246 (11th Cir.
2016). Saft alleges that Jabil's busbar cards and
Bourns' resistors caused damage to Saft's other
property-its EV-2 batteries-rendering them unusable. Doc. 40
at ¶¶ 7, 13. Saft's EV-2 battery is a custom
designed and engineered item manufactured for commercial and
industrial use, not an everyday common product whose workings
are familiar. While Jabil and Bourns contend that their
products were fully integrated into Saft's batteries,
Saft maintains (borrowing from caselaw) that its battery is
more akin to the hull of a ship into which a defective engine
has been placed, and further suggests that engineering detail
regarding the construction of Saft's battery will clarify
how it operates. As Florida's Fifth District Court
of Appeal noted, “What constitutes damage to
‘other property' is sometimes a puzzling
circumstance to determine in resolution of economic loss
cases.” Southland Const., Inc. v. Richeson
Corp., 642 So.2d 5, 9 (Fla. 5th DCA 1994); see also
Pycsa Panama, 2006 WL 8432715, at *5 (quoting
Southland's “puzzling circumstance”
language and denying motion to dismiss based on economic loss
rule because “[t]he pleadings are not entirely clear as
to the nature and extent of damage to any property other than
the [defective property] itself” so “it is
possible that the ‘other property' exception may
apply”); Boracayan, 2007 WL 9700684, at *3
(finding that at motion to dismiss stage, where the facts are
not developed, an allegation of damage to other property is
enough to survive an economic loss rule challenge, which
could resurface at summary judgment). Likewise here:
Saft's allegations of damage to other property are
sufficient to avoid application of the economic loss rule at
the pleadings stage.
this reason, Jabil's motion to dismiss (Doc. 91) will be
denied without prejudice to raising the economic loss rule
later in the case. Because the Court concludes that the
counts against Bourns are sufficient to satisfy Rule 8, the
Court next turns to Bourns' argument that it is
nonetheless due to be dismissed for lack of personal
a motion to dismiss for lack of personal jurisdiction, a
court must accept the facts alleged in plaintiff's
complaint as true, to the extent they are not contradicted by
defendant's affidavits.” Kim v. Keenan, 71
F.Supp.2d 1228, 1231 (M.D. Fla. 1999) (citing Cable/Home
Comm. Corp. v. Network Prods., Inc., 902 F.2d 829, 855
(11th Cir. 1990)). “Once the plaintiff pleads
sufficient material facts to form a basis for in
personam jurisdiction, the burden shifts to the
defendant to challenge plaintiff's allegations by
affidavits or other pleadings.” Carmouche v.
Carnival Corp., 36 F.Supp.3d 1335, 1338 (S.D. Fla.
2014), aff'd sub nom., Carmouche v.
Tamborlee Mgmt., Inc., 789 F.3d 1201 (11th Cir. 2015).
“If the defendant provides sufficient evidence,
‘the burden shifts to the plaintiff to prove
jurisdiction by affidavits, testimony or
documents.'” Thomas v. Brown, 504
Fed.Appx. 845, 847 (11th Cir. 2013) (quoting Sculptchair,
Inc. v. Century Arts, Ltd., 94 F.3d 623, 627 (11th Cir.
1996)). If the evidence conflicts, the “court must
construe all reasonable inferences in favor of the
plaintiff.” Madara v. Hall, 916 F.2d
1510, 1514 (11th Cir. 1990).
federal court sitting in diversity jurisdiction undertakes a
two-step inquiry in determining whether personal jurisdiction
exists: the exercise of jurisdiction must (1) be appropriate
under the state long-arm statute and (2) not violate the Due
Process Clause of the Fourteenth Amendment to the United
States Constitution.” United Techs. Corp. v.
Mazer, 556 F.3d 1260, 1274 (11th Cir. 2009) (citations
omitted). Because the due process issue invokes
constitutional concerns, the Court must first determine
whether the state's long-arm statute is satisfied.
PVC Windoors, 598 F.3d at 807 (noting the district
court should have analyzed the long-arm statute before
addressing due process).
defendant can be subject to personal jurisdiction under the
Florida long-arm statute in two ways[.]” Schulman
v. Inst. for Shipboard ...