Trabakoolas v. Watts Water Technologies, Inc.

Background

The plaintiffs brought a class action concerning alleged defects in an acetal coupling nut used in Watts flexible plumbing toilet connectors. The parties agreed to a $23 million class settlement, which the court approved on August 5, 2014. The settlement class covered individuals and entities that owned or leased a residence or other structure in the United States containing a toilet connector. The final order and judgment broadly released claims concerning alleged failures of a coupling nut and barred settlement class members and others claiming through them from pursuing related proceedings.

Atlantic Surgical leased two condominium units in a New Jersey building. In August 2018, a water-flooding event allegedly occurred after a Watts toilet connector in the unit above Atlantic Surgical’s leased units failed. Atlantic Surgical suffered damages. Merchants, identified as Atlantic Surgical’s insurer and subrogee, filed one New Jersey lawsuit seeking to recover more than $478,000 it had paid for the damage. Atlantic Surgical filed a separate lawsuit seeking compensation for additional damage it said had not been reimbursed.

Watts asked this court to enforce its final order and judgment and to enjoin, meaning prohibit, Atlantic Surgical and Merchants from pursuing the New Jersey lawsuits. Watts argued that Atlantic Surgical and Merchants were covered by the settlement and that the lawsuits asserted released claims. Atlantic Surgical and Merchants argued that Atlantic Surgical was not in the settlement class because it did not own or lease the specific unit containing the failed connector. They also argued that their strict-liability and warranty claims were not the type of claims covered by the settlement.

Court’s Analysis

The court interpreted the settlement agreement together with its approved notice and claim forms. Although the settlement class definition referred to owning or leasing a residence or other structure containing a toilet connector, other settlement language stated that the agreement was intended to bind people and entities with an ownership, rental, or financial interest in structures containing or having contained a toilet connector. The notice and claim forms also indicated that the settlement covered people or entities that suffered property damage or paid to repair damage caused by a failed coupling nut.

The court concluded that Atlantic Surgical fit within the settlement class even though the failed connector was in the unit above its leased units. Atlantic Surgical leased units in the same office building, suffered damage from the connector’s failure, and sought to recover that damage from Watts. The court rejected reliance on New Jersey condominium law because the settlement agreement provided that California law governed and because the settlement’s language and attachments supplied the relevant interpretive context.

The court also rejected the argument that the settlement covered only contribution or indemnity claims. The agreement’s reference to a subrogated insurer or a person asserting contribution or indemnity was illustrative rather than exclusive. The release covered every claim on any legal or equitable ground concerning or related to an alleged coupling-nut failure, including claims for damages or liability of any kind.

Applying Ninth Circuit authority, the court explained that a settlement can bar a later claim when the later claim is based on the identical factual predicate—the same core facts—as the settled claims. The New Jersey lawsuits concerned damage allegedly caused by the same type of Watts toilet connector and coupling nut alleged to be defectively designed, manufactured, and labeled in the class action. The court therefore found that the New Jersey claims were not unrelated claims outside the settlement’s scope.

Disposition

The court granted Watts’s motion to enforce the final order and judgment. Atlantic Surgical and Merchants were enjoined from pursuing their claims in the two New Jersey actions. The order did not state that the motion or the claims were granted or dismissed with or without prejudice.