Goldrich v. Masco Corporation

Background

Steven Goldrich sued Masco Corporation, Watkins Wellness, and Wellness Marketing Corporation, doing business as Endless Pools, over an Endless Pool that he purchased in 2012. Goldrich alleged that the pool’s design and components were defective, including because the design did not account for high groundwater, the size of the room, or service access. He alleged that the pool required substantial repairs beginning in 2020, including an approximately $16,363.17 repair after an oil leak and approximately $22,400 in later repairs after the pool’s autocover brackets and frame failed.

Goldrich asserted six claims under New York common law: design defect, manufacturing defect, negligence, fraudulent concealment, failure to warn, and negligent infliction of emotional distress. The defendants moved to dismiss the First Amended Complaint under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to state a legally plausible claim.

Use of the Amended Complaint

The defendants asked the court to consider allegations in Goldrich’s original complaint, which described pool problems beginning in 2015. They argued that those allegations showed the claims were filed too late. The amended complaint focused instead on two problems beginning in 2020.

The court explained that an amended complaint ordinarily replaces the original complaint. Although courts may sometimes rely on an original complaint when an amended complaint directly contradicts it, the court found that Goldrich’s changes were not blatant or directly contradictory. The court treated the amended complaint as controlling for the motion and therefore did not use the original complaint to dismiss the claims based on the statute of limitations. The court nevertheless warned that it would scrutinize the evidence going forward and could impose sanctions if the pleadings were improperly manipulated.

Claims Against Masco

The court dismissed all claims against Masco. Goldrich alleged that Masco was Watkins’s parent, that Masco intervened in the management of Watkins or Endless, and that Masco was involved in designing or manufacturing the pool. The court found these allegations conclusory and insufficient to support piercing the corporate veil—the legal theory that can sometimes make a parent corporation liable for a subsidiary’s conduct.

The court stated that Goldrich needed facts plausibly showing that Masco exercised complete control over Watkins and used that control to commit a wrong causing Goldrich’s loss. Alleging that Masco was Watkins’s parent, without more, was insufficient. The court also rejected Goldrich’s argument that discovery could reveal Masco’s role, explaining that a plausible claim must come before discovery.

Economic-Loss Rule

The court agreed that Goldrich’s strict-liability and negligence-based claims were barred by New York’s economic-loss rule to the extent they sought damages for the pool itself and the costs of repairing it. That rule generally prevents tort recovery for economic losses that are essentially the subject of a contract, when there is no alleged personal injury or damage to other property.

Goldrich argued that the repairs involved damage to other property, such as plumbing and tiles. The court found that the First Amended Complaint did not specifically allege damage to his home or other property. A passing reference to work performed around the pool was too vague. The court therefore concluded that the relevant claims sought economic losses arising from damage to the pool that was the subject of the transaction.

Fraudulent Concealment

The court dismissed Goldrich’s fraudulent-concealment claim for failure to satisfy Federal Rule of Civil Procedure 9(b). That rule requires fraud to be pleaded with particularity, including details about the alleged omission, who made it, when and where it occurred, and why it was fraudulent.

Goldrich alleged that one or more defendants directed dealers not to tell customers that the pool’s motor was likely to fail and that the pool might need to be rebuilt. The court found that Goldrich did not identify which defendant made or directed the alleged omissions, or when and where they occurred. It also found that the allegations based on information and belief were not supported by facts explaining the basis for that belief.

Negligent Infliction of Emotional Distress

The court dismissed Goldrich’s negligent-infliction-of-emotional-distress claim because it duplicated his other tort claims. Under New York law, this claim generally requires emotional harm resulting from a breach that endangered the plaintiff’s physical safety or caused fear for that safety, and it cannot ordinarily be used when it merely repeats other tort or contract claims.

The court found that Goldrich’s allegations concerned the same alleged duty and conduct underlying his products-liability and fraudulent-concealment claims. It therefore dismissed the emotional-distress claim as duplicative.

Disposition

Judge Kenneth M. Karas granted the defendants’ motion to dismiss. Because this was the first adjudication of Goldrich’s claims on the merits, the court deemed the dismissal without prejudice. Goldrich may file an amended complaint within 30 days if he has a good-faith basis for doing so. If he does not meet that deadline, the action may be dismissed with prejudice. The court also stated that it would not grant further requests to amend absent an extraordinary showing.