Court of Appeals of North Carolina.

NEW PRIME, INC., d/b/a Prime, Inc., Plaintiff

v.

HARRIS TRANSPORT COMPANY and Transport Clearings East, Inc., Defendants.

 

No. COA12–271.

Aug. 7, 2012.

 

*1 Appeal by defendants from order entered 30 September 2011 by Judge Christopher W. Bragg in Union County Superior Court. Heard in the Court of Appeals 7 June 2012.

 

Haywood, Denny & Miller, LLP by George W. Miller, III for plaintiff-appellee.

 

Clark, Griffin & McCollum, LLP by Joe P. McCollum, Jr. for defendant-appellants.

 

CALABRIA, Judge.

Harris Transport Company (“Harris”) and its factoring agent, Transport Clearings East, Inc. (collectively “defendants”), appeal from an order granting New Prime, Inc., d/b/a Prime, Inc.’s (“plaintiff”) motion for summary judgment. We affirm.

 

I. Background

Hurricane Ivan struck the Gulf Coast of the United States in September 2004, creating a national emergency and causing significant property damage and utility outages. The catastrophic storm created a significant demand for ice in that region. Federal Emergency Management Agency (“FEMA”) contracted with IAP Services Worldwide (“IAP”) to coordinate the production and transportation of ice to the Gulf Coast. IAP then subcontracted with Captain Phip’s Seafood and Ice, Inc. (“Phip’s”) to produce or procure 2,800,000 bags of ice and have it transported to the Coast. Phip’s contracted with Harris and plaintiff, both interstate trucking companies, to transport ice to the Gulf Coast.

 

Plaintiff transported two truckloads of ice and later billed IAP. Harris transported the majority of the remaining truckloads and billed Phip’s. Phip’s sent invoices to IAP that included the ice and transportation services. When IAP paid Phip’s for the ice as well as the transportation, Phip’s mistakenly paid Harris for transporting all the deliveries billed and paid nothing to plaintiff.

 

When plaintiff learned that IAP paid Phip’s for plaintiff’s ice shipments, plaintiff contacted Phip’s who informed plaintiff that Harris was paid for all billed ice shipments because the invoice Harris sent Phip’s inadvertently included two loads that plaintiff delivered to the Gulf Coast. Plaintiff then contacted Harris. Although Harris admitted that it did not provide the transportation services for loads 524–1–5 and 524–1–53, the two loads that plaintiff transported, Harris refused to reimburse plaintiff for the loads it did not deliver.

 

On 9 June 2008, plaintiff filed a complaint against defendants alleging that Phip’s mistakenly paid Harris in the amount of $18,176 .90 for transporting ice that plaintiff, not Harris, delivered. Plaintiff alleged, inter alia, that defendants received a benefit, were aware of the benefit and should pay restitution for unjust enrichment and unfair and deceptive practices. On 25 July 2011, defendants filed a motion for summary judgment on the grounds that no genuine issue as to any material fact existed. On 17 August 2011, plaintiff filed a cross motion for summary judgment also on the grounds that no genuine issue as to any material fact existed. After a hearing, on 30 September 2011 the trial court entered an order granting plaintiff’s cross motion for summary judgment on the basis of unjust enrichment in the amount of $18,176.90. The trial court also granted defendants’ motion for summary judgment on the issue of unfair and deceptive practices. Defendants appeal.

 

II. Standard of Review

*2 Defendants allege that the trial court erred in granting plaintiff’s motion for summary judgment because there was never a contract between plaintiff and Harris and the trial court did not address the contract in the order on appeal. We disagree.

 

Summary judgment is appropriate if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” N.C. Gen.Stat. § 1A–1, Rule 56(c). When “the parties have cross motions for summary judgment, and there is no dispute as to any material fact, the sole issue on appeal is whether the trial court properly concluded that one party was entitled to judgment as a matter of law or if judgment should have been entered in favor of the opposing party.” IMT, Inc. v. City of Lumberton, ––– N.C.App. ––––, ––––, 724 S.E.2d 588, 592 (2012). When reviewing an order of summary judgment, the standard of review is de novo. Builders Mut. Ins. Co. v. North Main Constr. Ltd., 361 N.C. 85, 88, 637 S.E.2d 528, 530 (2006).

 

III. Unjust Enrichment

“The doctrine of unjust enrichment was devised by equity to exact the return of, or payment for, benefits received under circumstances where it would be unfair for the recipient to retain them without the contributor being repaid or compensated.” Collins v. Davis, 68 N.C.App. 588, 591, 315 S.E.2d 759, 761 (1984). An unjust enrichment claim “is neither in tort nor contract but is described as a claim in quasi contract or a contract implied in law.” Booe v. Shadrick, 322 N.C. 567, 570, 369 S.E.2d 554, 556 (1988). A party must prove three elements to establish a claim for unjust enrichment: “that it conferred a benefit on another party, that the other party consciously accepted the benefit, and that the benefit was not conferred gratuitously or by an interference in the affairs of the other party.” Southeastern Shelter Corp. v. BTU, Inc., 154 N.C.App. 321, 330, 572 S.E.2d 200, 206 (2002) (citing Booe at 570, 369 S.E.2d at 556).

 

In the instant case, defendants cite Concrete Co. v. Lumber Co., to support the proposition that “an express contract precludes an implied contract with reference to the same matter.” 256 N.C. 709, 713, 124 S.E.2d 905, 908 (1962). In Concrete, the plaintiff, a supplier of building materials, contracted with Fore–Taylor Building Company (“Fore–Taylor”) to sell and deliver the materials to construction sites. Id. at 710, 124 S.E.2d at 905. Plaintiff delivered the materials to lots that were owned by Troy Lumber Co. (“the defendant”). Id. The plaintiff, unable to recover from Fore–Taylor, filed a claim for breach of implied contract against the defendant, the recipient of the building materials. Id. at 713, 124 S.E.2d at 907. The Court held that “when there is a contract between two persons for the furnishing of services or goods to a third, the latter is not liable on an implied contract simply because he has received such services or goods.” Id. at 714, 124 S.E.2d at 908. However, Concrete is distinguishable from the instant case. The defendant in Concrete received the building materials pursuant to a contract between the plaintiff and Fore–Taylor. Id. Although the defendant never ordered the building materials from the plaintiff and never agreed to pay for the materials it received, the defendant received an expected benefit, not an unexpected and unearned benefit. Id. at 713, 124 S.E.2d at 907.

 

*3 In the instant case, unlike Concrete, plaintiff and Harris each had separate contracts to transport ice to the Gulf Coast for their own benefit. Each delivered and billed for the ice they transported. IAP paid Phip’s and Phip’s mistakenly paid Harris for all truckloads billed which included two truckloads that plaintiff delivered. Harris received an unexpected and unearned benefit but refused to reimburse plaintiff those funds. Harris billed Phip’s for plaintiff’s work, received payments for shipments plaintiff delivered and refused to send plaintiff the payments it mistakenly received.

 

Defendants are not disputing the second and third elements under the theory of unjust enrichment. However, defendants claim that plaintiff cannot recover because plaintiff failed to show the first requirement for unjust enrichment: that plaintiff conferred a benefit on defendants, citing Sellers v. Morton, 191 N.C.App. 75, 661 S.E.2d 915 (2008). In Sellers, the plaintiff sold his business to SGI Acquisitions, LLC (“SGI”). Id. at 77, 661 S.E.2d at 918. Thomas Morton (“Morton”) and Frank Kincaid (“Kincaid”) were the principal officers, directors and shareholders of SGI. Id. Shortly thereafter, the plaintiff entered into a consulting and non-compete agreement and a lease agreement with SGI. Id. Subsequently, SGI changed its name to Glass Solutions, LLC. (“Glass”). Id. When Glass later encountered financial trouble, it sold all its assets to Stroupe Mirror (“Stroupe”). Id. at 78, 661 S.E.2d at 919. Stroupe entered into employment and consulting agreements with Morton and Kincaid, but did not assume liability for either the lease agreement or the non-compete agreement. Id. The plaintiff stopped receiving payment and received a letter from Glass notifying him that Glass had ceased operations and had no remaining funds for payments on the lease agreement or non-compete agreement. Id. Subsequently, the plaintiff initiated an action against Morton, Kincaid and Stroupe, claiming, inter alia, that Morton and Kincaid were unjustly enriched because funds which would have been used to pay the plaintiff were used for Morton and Kincaid’s employment and consulting contracts. Id. at 84, 661 S.E.2d at 922. This Court held that the plaintiff could not recover under the theory of unjust enrichment because he had failed to prove that he conferred a benefit on Morton and Kincaid. Id. at 84, 661 S.E.2d at 923.

 

The instant case is distinguishable. In Sellers, Morton and Kincaid received funds which the plaintiff thought he should have received. However, there was no evidence that the plaintiff had a superior legal title to those funds or that Morton and Kincaid received money for work performed by plaintiff. In contrast, here Harris received payment for two truckloads of ice that plaintiff delivered. When Harris billed Phip’s for the truckloads it delivered, plaintiff’s deliveries were also included, and Phip’s paid Harris for all the transportation billed. Plaintiff learned, after billing both IAP and Phip’s, that Harris also received the payment for the two loads that plaintiff delivered. When plaintiff requested payment from Harris, Harris refused to pay plaintiff, even though Harris had no legal or equitable right to those funds.

 

*4 In Embree Const. Group, Inc. v. Rafcor, Inc., the plaintiff, a general contractor, entered into an agreement to build a restaurant with a property owner. 330 N.C. 487, 411 S.E.2d 916 (1992). The property owner had a construction loan with the defendant, a bank. Id. When the defendant refused to pay the plaintiff, even though the plaintiff completed the project prior to the property owner defaulting on the loan, the plaintiff filed a claim for unjust enrichment against the defendant. Id. The plaintiff claimed that the defendant was unjustly enriched because it did not disburse the funds remaining in the construction loan to the plaintiff, but acquired the completed building as a security for the loan, and thus received the benefit it had bargained for under the loan agreement with the property owner. Id. Our Supreme Court agreed, and held that the defendant was unjustly enriched. Id. Embree relied on Booe v. Shadrick, indicating that “[a] person who has been unjustly enriched at the expense of another is required to make restitution to the other.” Id. at 496, 411 S.E.2d at 923 (citing Booe, 322 N.C. at 570, 369 S.E.2d at 555–56).

 

In the instant case, plaintiff alleged that defendants was unjustly enriched at plaintiff’s expense because defendants received funds, and admitted receiving funds for two loads of ice, 524–1–5 and 524–1–53, that it did not deliver. Harris knew that plaintiff had delivered these two loads but refused to pay plaintiff from the funds. Therefore, Harris received the benefit that it bargained for in its contract with Phip’s but also received an extra benefit because it received funds that should have been paid to plaintiff and refused to make restitution to plaintiff.

 

Plaintiff cites Primerica Life Ins. Co. v. James Massengill & Sons to support the theory of unjust enrichment. In Primerica the recipient of funds refused to return the money, but the Court found that he had been unjustly enriched because the money was conferred on him, he consciously accepted the benefit, and it was not conferred gratuitously since it was obviously a mistake.   ––– N.C.App. ––––, 712 S.E.2d 670, 679 (2011). In the instant case, both plaintiff and Harris delivered ice but only defendants got paid, therefore a $18,176.90 financial benefit was conferred on defendants. Defendants “consciously accepted the benefit” by admitting that Phip’s paid for both Harris’s work and some of the plaintiff’s work but refused to pay plaintiff the amount over and above the amount it had earned for transporting ice. The benefit was not “conferred gratuitously” because plaintiff did not transport ice for Harris’s benefit, and Phip’s paid defendants an amount in excess of the amount it had earned by mistake. Since there is no issue of material fact as to these three requirements, summary judgment was appropriate.

 

Our holding in the instant case is in line with the Restatement and other states. Many jurisdictions do not require that the plaintiff confer a direct benefit on the defendant in order to recover under a theory of unjust enrichment. See Town of New Hartford v. Conn. Res. Recovery Auth., 970 A.2d 592, 618 (Conn.2009) (“Although unjust enrichment typically arises from a plaintiff’s direct transfer of benefits to a defendant, it also may be indirect, involving, for example, a transfer of a benefit from a third party to a defendant when the plaintiff has a superior equitable entitlement to that benefit.”); Smith v. Whitener, 856 S.W.2d 328, 330 (Ark.Ct.App.1993) (recognizing that although enrichment to the defendant must be at the expense of the plaintiff, the enrichment need not come directly from the plaintiff, but rather may come from a third party.). See also Bates–Farley Sav. Bank v. Dismukes, 33 S.E. 175 (Ga.1899); In re Turer’s Estate, 133 N.W .2d 765 (Wis.1965); Dechen v. Dechen, 59 A.D. 166 (N.Y.App.Div.1901).

 

*5 The Restatement indicates that “[i]f a third person makes a payment to the defendant to which (as between claimant and defendant) the claimant has a better legal or equitable right, the claimant is entitled to restitution from the defendant as necessary to prevent unjust enrichment.” Restatement (Third) of Restitution and Unjust Enrichment § 48 (2011). Illustration 1 further states, “A owes B $500. Intending to pay this debt, A sends $500 by mistake to C, to whom A has no obligation. C is liable to A … and to B by the rule of this section. C’s payment of $500 to either of them discharges both of C’s liabilities.” Restatement (Third) of Restitution and Unjust Enrichment § 48, cmt. b, illus. 1 (2011).

 

IV. Conclusion

The trial court did not err in granting plaintiff’s cross motion for summary judgment because plaintiff established all three elements of unjust enrichment and therefore there was no genuine issue as to any material fact and plaintiff was entitled to judgment as a matter of law. What is especially troubling in this case is that it was an emergency situation and it appears the primary mission of the vendors was to get ice to those in need. The fact that payment for two loads of ice was sent to the wrong vendor was understandable, and excusable. It is a pity that this case could not be resolved without going to court.

 

Affirmed.

 

Judges STROUD and McCULLOUGH concur.

Report per Rule 30(e).

United States District Court,

N.D. Illinois,

Eastern Division.

Jose M. PADILLA, as the Special Administrator of the Estate of Maximilian Padilla, Plaintiff,

v.

HUNTER DOUGLAS WINDOW COVERINGS, INC.; Window Covering Manufacturers Association; and Window Covering Safety Council, Defendants.

 

No. 09 CV 1222.

Aug. 8, 2012.

 

Arturo Jauregui, Jauregui & Associates, Chicago, IL, for Plaintiff.

 

Jeffrey R. Williams, Schiff Hardin LLP, San Francisco, CA, Joseph J. Krasovec, III, Holly A. Podulka, Schiff Hardin LLP, Mark Edward Winters, Sanchez & Daniels, Chicago, IL, Jameson Carroll, Jameson B. Carroll Law Group, LLC, Michael Weiss, Stephanie B. Biddle, King & Spalding LLP, Atlanta, GA, for Defendants.

 

MEMORANDUM OPINION AND ORDER

JOHN Z. LEE, District Judge.

*1 Plaintiff, Jose M. Padilla (“Plaintiff”), brings this diversity suit alleging violations of state contract and tort law by Defendants Hunter Douglas Window Coverings, Inc. (“Hunter Douglas”), Window Covering Manufacturers Association (“WCMA”), and Window Covering Safety Council (“WCSC”). Defendants WCMA and WCSC now move for summary judgment pursuant to Fed.R.Civ.P. 56. For the following reasons, Defendants’ motion is granted.

 

I. Background

On April 22, 2008, Plaintiff’s three-year old son died after he became entangled in the metal beaded chain cord on the miniblinds in his home. (Defs.’ LR 56.1(a)(3) ¶ 1.) The miniblinds at issue were manufactured by Hunter Douglas, a Delaware corporation in the business of manufacturing and selling window coverings, including vertical miniblinds with cords and metal bead chains. (Defs.’ LR 56.1(a)(3) ¶ 2; Def. Hunter Douglas Answer & Affirm. Defs to Pl.’s First Am. Compl. ¶ 4.)

 

Hunter Douglas is a member of the WCMA, an industry trade group that represents and promotes the interests of manufacturers, fabricators, and assemblers of window coverings. (Defs.’ LR 56.1(a) (3) ¶ 3.) The WCMA is responsible for developing and implementing standards for the manufacture of window coverings, including vertical blinds. (Defs.’ LR 56.1(a)(3) ¶ 4.)

 

Hunter Douglas is also a member of the WCSC, a coalition of major U.S. manufacturers, importers and retailers of window coverings that conducts, in conjunction with its members and the United States Consumer Product Safety Commission (“CPSC”), nationwide public education and information efforts concerning the hazard of strangulation on window blind cords. (Defs.’ LR 56.1(a)(3) ¶ 5.) The WCSC also provides free retrofit kits to reduce the likelihood of strangulation on window blind cords, including the cords on vertical blinds. (Defs.’ LR 56.1(a)(3) ¶ 5.) The WCSC’s efforts were approved by the CPSC as part of a voluntary corrective action plan. (Defs.’ LR 56.1(a)(3) ¶ 6.)

 

Hunter Douglas engaged in its own efforts to promote window covering safety by providing warnings on products and sales materials, providing signage and pamphlets on window blind safety for retailers to make available to Hunter Douglas customers, participating in promotions events such as Window Covering Safety Month with its own publications and promotions, and issuing press releases to the media regarding cord safety. (Defs.’ LR 56.1(a)(3) ¶ 8; Defs.’ Ex. 1, Kelley Aff. ¶¶ 5–6.) FN1 Hunter Douglas also alerted its customers of the need to retrofit existing products to incorporate safety features and provided retrofit kits directly to its customers. (Defs.’ LR 56.1(a)(3) ¶ 9; Defs.’ Ex. 1, Kelley Aff. ¶ 7.) Finally, Hunter Douglas directed requests for retrofit kits to the WCSC for fulfillment. (Defs.’ LR 56.1(a)(3) ¶ 9; Defs.’ Ex. 1, Kelley Aff. ¶ 7.) In short, Hunter Douglas never ceased its own efforts to warn consumers about the hazards associated with window blinds or to promote window blind cord safety to the public. (Defs.’ LR 56.1(a)(3) ¶ 10.)

 

FN1. In Plaintiff’s LR 56.1(b)(3) statement, Plaintiff claims that regarding the facts in ¶¶ 8–9 of Defendants’ LR 56.1(a)(3) statement, Plaintiff “can neither admit nor deny these facts because Defendants have failed to reference any documents.” But in Defendants’ LR 56.1(a)(3) statement, Defendants cite the affidavit of O.B. Kelley in support of the facts in these paragraphs. When a responding party’s statement fails to dispute the facts set forth in the moving party’s statement in the manner dictated by the rule, those facts are deemed admitted for purposes of the motion. Smith v. Lamz, 321 F.3d 680, 683 (7th Cir.2003). A district court is not required to “wade through improper denials and legal argument in search of a genuinely disputed fact.” Id. (internal citations omitted). Thus, the facts in Defendants’ LR 56.1(a)(3) statement in ¶¶ 8–9 are deemed admitted.

 

II. Summary Judgment

*2 Federal Rule of Civil Procedure 56(a) provides that summary judgment is proper where “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). The moving party has the initial burden of establishing that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has sufficiently demonstrated the absence of a genuine issue of material fact, the nonmoving party must then set forth specific facts showing there are disputed material facts that must be decided at trial. Id. at 321–22.

 

III. Discussion

Plaintiff asserts claims against the WCMA and the WCSC on a theory of negligent undertaking. Plaintiff alleges that the WCMA and the WCSC voluntarily undertook and breached a duty to (1) warn consumers about the risk of strangulation posed by window coverings and (2) carry out a corrective action plan designed to eliminate the identified strangulation hazard by initiating the retrofit and recall program.

 

To state a claim for negligence, Plaintiff must establish the existence of a duty of care owed by the defendant to the plaintiff, a breach of that duty, and an injury proximately caused by that breach. Iseberg v. Gross, 227 Ill.2d 78, 316 Ill.Dec. 211, 879 N.E.2d 278, 284 (Ill.2007). To survive a motion for summary judgment, the plaintiff must present some factual basis in support of each element of the cause of action. See Billings v. Madison Metro. Sch. Dist., 259 F.3d 807, 812 (7th Cir.2001). Defendants WCMA and WCSC contend that Plaintiff cannot, as a matter of law, establish the first element of a negligence claim-that they owed Plaintiff a duty. Thus, the issue before the Court is whether the WCMA or the WCSC voluntarily undertook a legal duty to Plaintiff.

 

Whether a defendant has voluntarily undertaken a legal duty to a plaintiff is a question of law for the court that is properly addressed in a motion for summary judgment. Lange v. Fisher Real Estate Dev. Corp., 358 Ill.App.3d 962, 295 Ill.Dec. 123, 832 N.E.2d 274, 282 (Ill.App.Ct.2005); Kennedy v. Medtronic, Inc., 366 Ill.App.3d 298, 303 Ill.Dec. 591, 851 N.E.2d 778, 786 (Ill.App.Ct.1999). Summary judgment is appropriate where the defendant owed no duty to the plaintiff. Bailey v. Edward Mines Lumber Co., 308 Ill.App.3d 58, 241 Ill.Dec. 317, 719 N.E.2d 178, 181 (Ill.App.Ct.1999). Illinois courts look to Section 324A of the Restatement (Second) of Torts to evaluate whether a party voluntarily undertook a legal duty. Id. at 184. Section 324A provides:

 

One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person or his things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if

 

(a) his failure to exercise reasonable care increases the risk of such harm, or

 

(b) he has undertaken to perform a duty by the other to the third person, or

 

*3 (c) the harm is suffered because of reliance of the other or the third person upon the undertaking.

 

RESTATEMENT (SECOND) OF TORTS § 324A (1965). Any duty imposed on a defendant under the voluntary undertaking theory is limited to the extent of the undertaking. Frye v. Medicare–Closer Corp., 153 Ill.2d 26, 178 Ill.Dec. 763, 605 N.E.2d 557, 560 (Ill.1992).

 

Plaintiff relies on only subsection (b) and alleges that the WCMA and the WCSC undertook a duty to warn, recall, and retrofit that otherwise would belong to Hunter Douglas. Defendants WCMA and WCSC contend that they did not undertake a legal duty because subsection (b) applies only when a party completely supplants or replaces the efforts of the party that originally held the duty. The WCMA and the WCSC contend that they never undertook to perform a duty in place of Hunter Douglas; rather, their efforts to warn and provide retrofit kits complemented and accompanied Hunter Douglas’s own efforts to warn its consumers about the dangers of window cord strangulation and provide retrofit kits to those who purchased its products. Thus, Defendants WCMA and WCSC argue that they did not undertake a legal duty under subsection (b) and are therefore entitled to summary judgment.

 

As a court sitting in diversity, we apply the law of Illinois. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Allstate Ins. Co. v. Menards, Inc., 285 F.3d 630, 632–33 (7th Cir.2002). The Illinois Supreme Court and Illinois appellate courts have not directly addressed whether a party that voluntarily undertakes a duty must completely supplant that portion of the original party’s duty that it undertakes in order to face liability under subsection (b). In the absence of controlling precedent, our task is to predict how the Illinois Supreme Court would decide this particular issue. Allstate, 285 F.3d at 632–33; Research Systems Corp. v. IPSOS Publicite, 276 F.3d 914, 925 (7th Cir.2002).

 

Although Illinois courts have not directly addressed the issue, many other courts have considered it and have adopted the position espoused by the WCSC and the WCMA. In Hutcherson v. Progressive Corp., 984 F.2d 1152, 1154 (11th Cir.1993), for example, a truck driver swerved out of his lane and struck and killed a pedestrian. The victim’s widow filed suit against the trucking company’s insurer under Section 324A(b) alleging that the insurer voluntarily undertook a duty of monitoring the trucking company’s drivers by providing the trucking company with various safety services, including periodic independent review of the company’s drivers. Id. at 1154, 1156. The Eleventh Circuit affirmed summary judgment for the insurer because there was no evidence that the insurer “completely assumed” the trucking company’s duty to monitor the safety of its drivers, and in order to be liable under section 324A(b), a party must undertake a duty “in lieu of, rather than a supplement to” the original party’s duty. Id. at 1156–57. See also Obenauer v. Liberty Mut. Ins. Co., 908 F.2d 316, 317 (8th Cir.1990) (concluding that an insurer providing safety services to a manufacturer was not liable under Section 324A to the user of a manufactured product because the insurer did not “replace” the manufacturer’s duty to design a safe product); Davis v. Liberty Mut. Ins. Co., 525 F.2d 1204, 1207–08 (5th Cir.1976) (requiring that the party with the original duty completely “delegate[ ]” the duty to the undertaking party in order for the undertaking party to be liable under subsection (b)); Blessing v. U.S., 447 F.Supp. 1160, 1193–94 (E.D.Pa.1978) ( “the Restatement provision [324A(b) ] seems to reach not the situation in which one undertakes to perform functions coordinate to or even duplicative of activities imposed on another by a legal duty, but rather the situation in which one actually undertakes to perform for the other the legal duty itself”); Ironwood Springs Christian Ranch, Inc. v. Walk to Emmaus, 801 N.W.2d 193, 202 (Minn.Ct.App.2011) (“to impose liability under section 324A(b), one who undertakes a duty owed by another to a third person must completely assume the duty”); Plank v. Union Elec. Co., 899 S.W.2d 129, 131 (Mo.Ct.App.1995) (“one must intend to completely subsume or supplant the duty of the other party in order to incur liability for nonperformance of that duty”); Furek v. Univ. of Del., 594 A.2d 506, 515–16 (Del.1990) (Section 324A(b) applies “only when one undertakes to supplant the duty of another owed to a third person”).

 

*4 Seventh Circuit and Illinois case law is consistent with this reading of Section 324A(b). In LM v. United States, the Seventh Circuit noted that to hold a defendant liable under Section 324A(b), a plaintiff must establish that the defendant “relieved a third party of its duty.” LM v. United States, 344 F.3d 695, 702 (7th Cir.2003) (Illinois law) (emphasis added). Similarly, in Hernandez v. Rapid Bus Co., 267 Ill.App.3d 519, 204 Ill.Dec. 456, 641 N.E.2d 886, 887–91 (Ill.App.Ct. 1st Dist.1994), an Illinois appellate court found that a bus company that transported special education students and a school board attendant who supervised and escorted the students from the bus to the school building voluntarily undertook a duty under Section 324A(b) to supervise and escort the students only when the school board attendant who normally performed this function was absent. When the attendant was present, the bus company had not undertaken a duty under Section 324A(b). Id. at 891.

 

Plaintiff contends, however, that the comments to Section 324A of the Restatement establish that a party need not supplant another’s duty in order to be liable under subsection (b); rather, a party may voluntarily undertake a duty in conjunction with another and still face liability. Plaintiff points to comment d in particular, which provides that “even where the negligence of the actor does not create any new risk or increase an existing one, he is still subject to liability if, by his undertaking with the other, he has undertaken a duty which the other owes to a third person.” RESTATEMENT (SECOND) OF TORTS § 324A (1965). Plaintiff argues that the word “with” establishes that a party may undertake a duty alongside another and face liability even if the party originally holding the duty does not forego its duty.

 

But the three illustrations to comment d do not support such a reading. In the first illustration a managing agent incurs liability for negligent repairs when he “takes charge” of a building for the owner. In the second illustration, an individual incurs liability for negligent inspection when employed to inspect telephone poles. In the third illustration, a person incurs liability for negligent inspection of work conditions when employed as the superintendent of construction work. In each of these illustrations, the party facing liability undertakes the responsibility of performing the original party’s duty completely. A managing agent does not merely assist in the repair of a building, he undertakes the responsibility completely. A pole inspector does not merely assist in the inspection of a pole, he performs the inspection completely. And a superintendent does not merely assist with the oversight of construction, he completely assumes that duty. Plank, 899 S.W.2d at 131. See also Blessing, 447 F.Supp. at 1194, (“In each of these examples of 324(b) liability, the one held liable when he negligently performed his undertaking and injury to a third person resulted had undertaken to perform tasks on behalf of another and in lieu of that other.” ) (citing comment d) (emphasis added). Thus, Plaintiff’s reading of comment d is not consistent with the comment’s illustrations and therefore is unpersuasive.

 

*5 We are also mindful that, under Illinois law, the existence of a duty “turns in large part on public policy considerations.” Ward v. K Mart Corp., 136 Ill.2d 132, 143 Ill.Dec. 288, 554 N.E.2d 223, 232 (Ill.1990). And the Illinois Supreme Court has expressly indicated that public policy supports a narrow construction of voluntary undertakings. See Frye, 178 Ill.Dec. 763, 605 N.E.2d at 560; Doe v. Big Bros. Big Sisters of Am., 359 Ill.App.3d 684, 296 Ill.Dec. 108, 834 N.E.2d 913, 928 (Ill.App.Ct.2005). For claims against trade associations in particular, public policy is “part of the legal mix” and favors not imposing a duty. Bailey, 241 Ill.Dec. 317, 719 N.E.2d at 183. Indeed, the Bailey court noted of trade associations:

 

Such organizations serve many laudable purposes in our society. They contribute to the specific industry by way of sponsoring educational activities, and assisting in marketing, maintaining governmental relations, researching, establishing public relations, standardization and specification within the industry, gathering statistical data and responding to consumer needs and interests. Furthermore, trade associations often serve to assist the government in areas that it does not regulate. 241 Ill.Dec. 317, 719 N.E.2d at 183 (quoting Meyers v. Donnatacci, 220 N.J.Super. 73, 531 A.2d 398, (N.J.Super.Ct.1987).

 

To punish those who voluntarily assist others would discourage benign acts of assistance in contravention of public policy. See Plank, 899 S.W.2d. at 131.

 

For these reasons, we hold that for a party to be liable under Section 324A(b) under Illinois law, the party must supplant the duty it undertakes from the party that originally held the duty, not merely assist or supplement the service provided by the other.

 

Here, Plaintiff has presented no evidence that the WCMA or the WCSC supplanted or completely overtook Hunter Douglas’s duty to warn consumers about the risk of strangulation posed by window coverings and carry out a corrective action plan to eliminate the identified strangulation hazard through a retrofit and recall program. As a member of the WCSC, Hunter Douglas has maintained its own safety efforts. (Defs.’ LR 56.1(a)(3) ¶ 5, 8; Defs.’ Ex. 1, Kelley Aff. ¶ 5.) Specifically, Hunter Douglas has provided warnings on products and sales materials, provided signage and pamphlets on window blind safety for retailers to make available to Hunter Douglas customers, participated in promotional events such as Window Covering Safety Month with its own publications and promotions, and issued press releases to the media regarding cord safety. (Defs.’ LR 56.1(a)(3) ¶ 8; Defs.’ Ex. 1, Kelley Aff. ¶ 6.)

 

Additionally, Hunter Douglas has alerted its own customers of the need to retrofit existing products to incorporate safety features and has provided retrofit kits directly to its customers and directed requests for retrofit kits to the WCSC for fulfillment. (Defs.’ LR 56.1(a)(3) ¶ 9; Defs.’ Ex. 1, Kelley Aff. ¶ 7.) In short, there is no evidence that Hunter Douglas relinquished to the WCSC or the WCMA its efforts to warn about the dangers of strangulation in the cords of window coverings or provide retrofit and recall kits to consumers. (Defs.’ LR 56.1(a)(3) ¶ 10; Defs.’ Ex. 1, Kelley Aff. ¶ 8.) Thus, Defendants WCMA and WCSC did not undertake a legal duty to the Plaintiff under Section 324A(b) and, therefore, cannot be liable to Plaintiff. Accordingly, the Court finds that there are no genuine issues of material fact and Defendants WCMA and WCSC are entitled to judgment as a matter of law. FN2

 

FN2. Because Defendants WCMA and WCSC are entitled to judgment as a matter of law on the duty issue, the Court need not address Defendant WCMA’s argument about the extent of its involvement in the recall and retrofit program.

 

IV. Conclusion

*6 For all the reasons set forth above, the Court grants Defendants WCMA and WCSC’s motion for summary judgment [99]. WCMA and WCSC are hereby dismissed.

 

SO ORDERED.