eNotes: Liability – August 2022 – Washington, DC

SIGNIFICANT CASE SUMMARIES

DC CASE SUMMARY

Millers Capital Ins. Co. v. Hydrofarm, Inc.
United States District Court for the District of Columbia
2022 U.S. Dist. LEXIS 97830

Decided: June 1, 2022

A deposition transcript, attached to a complaint as an exhibit, is not a “written instrument” pursuant to Rule 10(c) of the Federal Rules of Civil Procedure.

Background

Hydrofarm Inc. (“Hydrofarm”) produced a submersible pump purchased by Holistic Remedies (“Holistic”) for use at its medical marijuana growing facility. Holistic rented its facility from Karajoel, LLC (“Karajoel”). On January 5, 2019, the submersible pump allegedly malfunctioned, starting a fire that damaged the entire facility. Both Holistic and Karajoel each filed claims with their respective insurers, Millers Capital Insurance Company and HDI Global Specialty SE. Both insurers, as subrogees of their respective insureds, then filed separate actions against Hydrofarm alleging claims of strict liability, negligence and breach of warranty. During discovery, Hydrofarm deposed Parham Attarpour (“Attarpour”), a former Holistic employee working on the day of the fire, and Michael Ian Schultz (“Schultz”), the Holistic facility manager at the time of the fire.

Hydrofarm filed a third-party claim against Holistic, alleging its employees’ improper use of the submersible pump caused the fire. Hydrofarm’s Third-Party Complaint cited to excerpts of the Attarpour and Schultz deposition transcripts. The two transcripts were also attached in their entirety as exhibits. Holistic filed a Motion to dismiss, arguing that the deposition transcripts should be treated as part of the Complaint, pursuant to Rule 10(c) of the Federal Rules of Civil Procedure. Holistic further argued that in doing so, Hydrofarm’s Third-Party Complaint must necessarily fail to state a claim upon which relief can be granted. In advancing this argument, Holistic relied upon testimony that was contained in the transcripts, but not cited in the Third-Party Complaint. Holistic argued that this testimony made Hydrofarm’s set of facts impossible.

Holding

The United States District Court for the District of Columbia denied Holistic’s Motion to dismiss. Rule 10(c) allows for “written instruments,” submitted as exhibits, to be part of the pleading for all purposes. However, the Court found that considering the deposition transcripts as part of the Complaint pursuant to Rule 10(c) would be improper. The District Court, following the lead of numerous other courts, refused to recognize deposition transcripts as part of initial pleadings because their inclusion at the initial pleading stage would procedurally blur the distinction between summary judgment and dismissal for failure to state a claim upon which relief can be granted.

Questions about this case can be directed to Marcelo Perez at (202) 945-9503 or mperez@tthlaw.com.