United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS FOR
RICHARD G. STEARNS UNITED STATES DISTRICT JUDGE
and Jean Egan brought this lawsuit against Daikin North
America, LLC (Daikin NA), Daikin Applied Americas, Inc.
(Daikin AA), and DACA Delaware Dissolution Trust (DACA Trust)
for damages caused by an allegedly defective HVAC
system. The Complaint sets out three claims:
breach of express and implied warranties (Count I); negligent
misrepresentation (Count II); and intentional
misrepresentation (Count III). Defendants move for summary
judgment on all counts. For the reasons to be explained, Daikin
AA and Daikin NA's motions for summary judgment will be
allowed, while DACA Trust's motion will be denied, except
for the Count I claims of breach of express warranty and
breach of implied warranty of fitness for a particular
purpose, which will be allowed.
facts, viewed in the light most favorable to the Egans as the
nonmoving party, are as follows. In 2009, the Egans purchased
and began renovating their home at 5 Commonwealth Avenue in
Boston, Massachusetts. As part of the renovation, the Egans
purchased a Daikin VRV III heating and cooling system, which
included twenty-one indoor fan coil units
(FCUs). The coils are composed of copper coils,
aluminum fins, and galvanized header plates. A non-conductive
Styrofoam drain pan sits beneath to collect water that drips
from the coils.
Egans hired Allied Consulting Engineering Services, Inc., as
their HVAC engineer. Allied coordinated with the Egans'
architect, Dell Mitchell Architects, to engineer and design
the HVAC system. A subcontractor, Climate Engineering, LLC,
then installed the system.
2016, the Egans began experiencing problems with the HVAC
coils. They bought replacement coils from Daikin NA and
replacement components from Daikin AA. They also hired New
England Cooling Towers (NECT) to install shutoff valves,
which allowed them to isolate individual coil failures
without affecting the entire system.
August 30, 2017, the Egans initiated this lawsuit. They
allege that the HVAC system was defectively designed because
the coils were susceptible to premature
judgment is appropriate when, based upon the pleadings,
affidavits, and depositions, “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed.R.Civ.P. 56(a).
“To succeed, the moving party must show that there is
an absence of evidence to support the nonmoving party's
position.” Rogers v. Fair, 902 F.2d 140, 143
(1st Cir. 1990). “‘[T]he mere existence of a
scintilla of evidence' is insufficient to defeat a
properly supported motion for summary judgment.”
Torres v. E.I. Dupont De Nemours & Co., 219 F.3d
13, 18 (1st Cir. 2000), quoting Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 252 (1986).
the Corporate Veil
preliminary matter, the Egans contend that all three
defendants are liable for claims stemming from the sale of
their HVAC system. While DACA Trust concedes that it provided
a one-year warranty on the HVAC coils, Daikin AA and Daikin
NA dispute their role in the sale. The Egans maintain that
Daikin AA can be held liable for the sale because it
“directed” Stebbin-Duffy's sale of the
system. Opp'n (Dkt # 69) at 1. Specifically, it
“employed Stebbins-Duffy as a manufacturer's
representative; distributed components of the VRV III system
to Stebbins-Duffy for sale to the plaintiffs; and compensated
Stebbins-Duffy based on its sale of the VRV III
system.” Id. at 7. However, as Daikin AA
points out, it did not manufacture, distribute, or sell the
Egans' HVAC system. Further, Stebbins-Duffy had
contracted with F.W. Webb Company to supply Daikin
products. Daikin NA, for its part, did not exist
until 2013, four years after the Egans purchased their HVAC
system. NSOF (Dkt # 46) ¶¶ 17, 22.
Egans counter that they are “entitled to pierce the
corporate veil and treat [the Daikin] defendants as a single
entity” because, among other things, Michael Hastings,
a Field Support Manager at Daikin NA, testified that DACA is
not a corporation separate from Daikin NA, that DACA and
Daikin NA have the same website, and that Daikin AA is a
representative of Daikin NA. Opp'n (Dkt # 58) at 16-19.
They rely on Brown v. Daikin Am. Inc., 756 F.3d 219
(2d Cir. 2014), where the court made note of the
intermingling of Daikin corporations. Opp'n (Dkt # 58) at
17. They also cite Daikin AA's joinder motion as evidence
of the “blurred distinction” among defendants.
Opp'n (Dkt # 69) at 12.
tenet of corporation common law is that corporations are
separate and distinct entities, whatever the relationships
that may exist between or among them. Scott v. NG U.S. 1,
Inc., 450 Mass. 760, 766 (2008). Massachusetts is
especially strict in respecting the corporate form.
Birbara v. Locke, 99 F.3d 1233, 1238 (1st Cir.
1996). Under Massachusetts law, “[a] veil may be
pierced [only] where the parent exercises ‘some form of
pervasive control' of the activities of the subsidiary
‘and there is some fraudulent or injurious consequence
of the intercorporate relationship.'”
Scott, 450 Mass. at 767, quoting My Bread Baking
Co. v. Cumberland Farms, Inc., 353 Mass. 614, 619
even accepting Hastings' testimony in its entirety, there
is insufficient evidence to overcome the reluctance of the
Massachusetts courts to authorize a piercing of the corporate
form. See Spaneas v. Travelers Indemnity Co., 423
Mass. 352, 354 (1996) (“Only in rare instances, in
order to prevent gross inequity, will a Massachusetts court
look beyond the corporate form.”). Although the Egans
accurately list the twelve factors that Massachusetts courts
consider when evaluating an attempt to pierce the corporate
veil, see Opp'n (Dkt # 58) at 17; see also
Pepsi-Cola Metro. Bottling Co. v. Checkers, Inc., 754
F.2d 10, 14-16 (1st Cir. 1985) (describing the twelve
factors), they do not apply them to the facts here. Instead,
they reaffirm their reliance on the Second Circuit's
decision in Brown, where the court held that the
plaintiff's employment discrimination claim sufficiently
alleged that Daikin America, Inc., and Daikin Industries,
Ltd., were his joint employer because they “conducted
interrelated operations, had common ownership, and were
subject to centralized control of labor relations.” 756
F.3d at 228. But the Egans' reliance is misplaced.
Brown necessarily applied New York and not
Massachusetts law; involved two different Daikin entities
that were in a parent-subsidiary relationship (not the
constellation of three subsidiaries here); and applied the
“single-employer test” under Title VII, and not a
veil-piercing test similar to the one adopted in
Massachusetts. Id. at 226-227. In short, the Egans
have been unable to produce enough evidence to pierce the
corporate veil. Therefore, before proceeding to the merits of
each claim, the court concludes that only DACA Trust, as
trustee for DACA, can be held liable for alleged warranties
and representations relating to the sale of the HVAC
system. See NSOF (Dkt # 46), Ex. A ¶
12 (“DACA is the only entity to provide a warranty to
of Express Warranty
express warranty may be created by “[a]ny affirmation
of fact or promise made by the seller to the buyer which
relates to the goods and becomes part of the basis of the
bargain.” Mass. Gen. Laws ch. 106, § 2-313(1)(a).
The Egans allege that defendants breached a number of express
warranties, including that the HVAC system could “be
installed practically anywhere, ” could “perform
flawlessly in any climate, ” and came with “one
of the best warranties in the business.” NSOF (Dkt #
59) ¶¶ 60, 74-75. But DACA Trust, for its part, is
not liable for any express warranty claim because the
warranty on the coils was for one year and it had long
expired (the Egans do not allege any problems with their 2009
HVAC system prior to September of 2016).See Cook v.
Cullen, 2007 WL 4946161, at *4 (Mass. Super. 2007)
(finding that a plaintiff's breach of express warranty
claim “was barred by the one-year restriction stated in
the warranty”); Boston Helicopter Charter, Inc. v.
Agusta Aviation Corp., 767 ...