Philadelphia Indemnity Insurance Company v. Uponor, Inc.

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF NEW YORK

PHILADELPHIA INDEMNITY INSURANCE

COMPANY a/s/o HILLSIDE COMMONS ONEONTA,

LLC,

Plaintiff, v.

UPONOR, INC.,

Defendant. 6:25-cv-1096 (BKS/MJK)

Appearances:

For Plaintiff:

Lawrence Lambert Frenkel Lambert Weisman & Gordon, LLP

53 Gibson Street Bay Shore, NY 11706 For Defendant:

Patrick J. Pickett Ahmuty, Demers & McManus

634 Plank Road, Suite 203A Clifton Park, NY 12065

Hon. Brenda K. Sannes, Chief United States District Judge:

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Plaintiff Philadelphia Indemnity Insurance Company, as subrogee of Hillside Commons Oneonta, LLC, brought this action in state court against Defendant Uponor, Inc. (Dkt. No. 2). The Complaint asserts state law claims for negligence, products liability, failure to warn, and breach of express and implied warranties. (Id.). Defendant removed the action to this Court based upon diversity jurisdiction. (Dkt. No. 1). Presently before the Court is Defendant's motion

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to compel arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16. (Dkt. No. 6). Also before the Court is Plaintiff's cross-motion to amend the complaint. (Dkt. No. 13). The motions are fully briefed. (Dkt. Nos. 6-1; 13-2; 14). For the reasons that follow, Defendant's motion to compel arbitration is denied, and Plaintiff's cross-motion to amend is granted.

II. BACKGROUND¹

Plaintiff Philadelphia Indemnity Insurance Company alleges that its subrogor, Hillside Commons Oneonta LLC, owned the subject building located at 150 Blodgett Avenue in Oneonta, New York. (Dkt. No. 2, ¶ 5). According to the allegations in the Complaint, Defendant Uponor, Inc., is the manufacturer and distributor of an "adapter fitting [ ] for certain PEX piping." (Dkt. No. 2, ¶¶ 7-8). Plaintiff alleges that, prior to April 24, 2024, the Uponor fitting "was purchased for" and installed in the Hillside Building. (Dkt. No. 2, ¶¶ 10, 12). Plaintiff further alleges that, on or about April 24, 2024, the fitting manufactured by Uponor "dezincified and failed, and as a result water leaked into and throughout the Hillside Building." (Dkt. No. 2, ¶ 13). On May 31, 2024, Plaintiff's counsel contacted "Uponor North America" regarding the Hillside Building. (Dkt. Nos. 6-2, ¶ 5; 6-3, at 2). In their letter, Plaintiff's counsel informed Uponor North America that they had been retained "in connection with water damages sustained to several units" at the Hillside Building "involving a fitting [ ] manufactured by Uponor." (Dkt. No. 6-3, at 2). Plaintiff's counsel stated that they had "retained an expert to examine the aforesaid fitting" and were "providing Uponor with an opportunity to participate in the joint inspection of the fitting." (Id.). Plaintiff's counsel requested the name and contact information

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for any expert Uponor would be retaining, for scheduling purposes. (Id.). Plaintiff's counsel also asked Uponor to "place [their] liability insurer on notice of this loss" and to provide their insurance information. (Id.).

According to Stacey Bissel, Uponor's Senior Manager for Claims, Risk, and Insurance, Uponor "provides a limited warranty in connection with the sale of PEX and other plumbing products." (Dkt. No. 6-2, ¶ 4). The limited warranty that covers the subject fitting²"warrants to the owner of the applicable real property that [the specified Uponor product] shall be free from defects in materials and workmanship, under normal conditions of use when installed as part of a potable water distribution system." (Dkt. No. 6-6, at 2). The limited warranty also contains a

"Warranty Claim Dispute Process" clause, which provides, in relevant part:

In the event claimant and Uponor are unable to resolve a claim through informal means, the parties shall submit the dispute to the American Arbitration Association or its successor (the "Association") for arbitration, and any arbitration proceedings shall be conducted before a single arbitrator in the Minneapolis, Minnesota metropolitan area.

(Dkt. No. 6-6, at 3). The limited warranty further provides that, "[b]y the mutual agreement of the parties, it is expressly agreed that this limited warranty and any claims arising from breach of contract, breach of warranty, tort, or any other claim arising from the sale or use of Uponor's products shall be governed and construed under the laws of the State of Minnesota." (Id.). Bissel characterizes the letter from Plaintiff's counsel as a "notice of claim," and states that "a warranty claim file was initiated by the Uponor Warranty team" in response. (Dkt. No. 6- 2, ¶ 6). "The Uponor Warranty team sent Plaintiff's counsel a confirmation email regarding the initiation of the claim." (Id.; Dkt. No. 6-4). The confirmation email included a claim number, and

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indicated that the "next step in the process" was "for you to ship us the underperforming part [ ] so that our lab can evaluate the parts for cause of failure." (Dkt. No. 6-4, at 2). On June 23, 2025, Plaintiff commenced this action against Uponor in the Supreme Court of the State of New York, County of Otsego. (See Dkt. No. 2). The Complaint alleges that Defendant "is liable and indebted to plaintiff in the sum of at least $471,784.13 with interest from April 24, 2024 and for any additional payments issued by [P]laintiff for damages and losses sustained by Hillside as a result of the April 24, 2024 incident." (Dkt. No. 2, ¶ 29). On August 14, 2025, Defendant removed the action to this Court. (See Dkt. No. 1).

III. LAW GOVERNING ARBITRATION AGREEMENTS

The Federal Arbitration Act, 9 U.S.C. § 1, et seq., provides that "[a] written provision in any [ ] contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction [ ] shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract[.]" 9 U.S.C. § 2. The FAA thus reflects a "federal policy favoring arbitration agreements," AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 346 (2011) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983), and puts them "upon the same footing as other contracts." Schnabel v. Trilegiant Corp., 697 F.3d 110, 118 (2d Cir. 2012) (quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 511 (1974). To that end, the FAA allows

"[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration [to] petition any United States district court [ ] for an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. §

4.

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Because the FAA "does not require parties to arbitrate when they have not agreed to do so," Schnabel, 697 F.3d at 118 (quoting Volt Info. Scis., Inc. v. Board of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468, 478 (1989)), a district court ruling on a motion to compel arbitration

"must first determine whether an agreement to arbitrate exists between the parties." Zachman v. Hudson Valley Fed. Credit Union, 49 F.4th 95, 101 (2d Cir. 2022) (citing Schnabel, 697 F.3d at

118). "The question of whether the parties agreed to arbitrate is determined by state contract law." Id. This question is for the Court to decide because "parties may not delegate to the arbitrator the fundamental question of whether they formed the agreement to arbitrate in the first place." See Doctor's Assocs., Inc. v. Alemayehu, 934 F.3d 245, 251 (2d Cir. 2019) (citing Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 299-301 (2010); see also Schnabel,

697 F.3d at 118 ("Inasmuch as the arbitrator has no authority of any kind with respect to a matter at issue absent an agreement to arbitrate, the question of whether such an agreement exists and is effective is necessarily for the court and not the arbitrator." (citation omitted)).

IV. STANDARD OF REVIEW

On a motion to compel arbitration, the Court applies a "standard similar to that applicable for a motion for summary judgment." Nicosia, 834 F.3d at 229 (quoting Bensadoun v. Jobe-Riat,

316 F.3d 171, 175 (2d Cir. 2003). This standard requires the Court to consider "all relevant, admissible evidence submitted by the parties," Meyer v. Uber Techs., Inc., 868 F.3d 66, 74 (2d Cir. 2017), which includes "depositions, documents, electronically stored information, affidavits or declarations, stipulations . . . admissions, [and] interrogatory answers." Fed. R. Civ. P. 56(c)(1)(A); see also Meyer, 868 F.3d at 74. Based on this evidence, the Court "draw[s] all reasonable inferences in favor of the non-moving party." Nicosia, 834 F.3d at 229.

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"The party seeking to compel arbitration bears an initial burden of demonstrating that an agreement to arbitrate was made." Zachman, 49 F.4th at 101-02. "This burden does not require the moving party to show that the agreement would be enforceable—only that an agreement to arbitrate existed." Id. at 102. "If the party seeking arbitration has substantiated the entitlement by a showing of evidentiary facts, the party opposing may not rest on a denial but must submit evidentiary facts showing that there is a dispute of fact to be tried." Kutluca v. PQ N.Y. Inc., 266 F. Supp. 3d 691, 700 (S.D.N.Y. 2017) (quoting Oppenheimer & Co. v. Neidhardt, 56 F.3d 352, 358 (2d Cir. 1995)). "If there is an issue of fact as to the making of the agreement for arbitration, then a trial is necessary." Nicosia, 834 F.3d at 229 (quoting Bensadoun, 316 F.3d at 175). "If, however, the arbitrability of the dispute can be decided as a matter of law based on the undisputed facts in the record, the court 'may rule on the basis of that legal issue and avoid the need for further court proceedings.'" See Diaz v. Wanrong Trading Corp., No. 25-cv-1575, 2025 WL 3119182, at *6, 2025 U.S. Dist. LEXIS 219784, at *15 (E.D.N.Y. Nov. 7, 2025) (quoting Wachovia Bank Nat'l Ass'n v. VCG Special Opportunities Master Fund, Ltd., 661 F.3d 164, 172 (2d Cir. 2011)).

V. DISCUSSION

Defendant moves to compel arbitration "based on the arbitration clause contained in the Uponor limited warranty." (Dkt. No. 6-1, at 2). Defendant contends that Plaintiff is "estopped from claiming the arbitration provisions of the limited warranty are not applicable to this dispute[,]" and that this dispute falls within the scope of the arbitration provision. (Id. at 6, 11-

12). Plaintiff disagrees, arguing that Plaintiff's insured "did not agree to resolve disputes with Uponor by way of arbitration." (Dkt. No. 13-2, at 10). Plaintiff also moves to amend the complaint to increase damages and withdraw the cause of action seeking damages for breach of

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express and implied warranties, arguing that this amendment would moot the pending motion to compel arbitration. (Id. at 16).

A. Motion to Compel Arbitration

As a preliminary matter, the Court notes that the record does not support the assertions underlying Defendant's motion. Defendant asserts that Plaintiff's insured "purchased the subject fitting distributed by" Defendant. (Dkt. No. 6-1, at 7). Defendant argues that, because Plaintiff's insured purchased the fitting, Plaintiff "is now estopped from arguing that the arbitration provision of the warranty is not applicable to them." (Id.). However, there is no evidence in the record supporting Defendant's assertion that Plaintiff purchased the fitting. The Complaint does not indicate who purchased the fitting. The Complaint merely states that "[p]rior to April 24, 2024, the Fitting, which was distributed by Uponor, was purchased for the Hillside Building."

(Dkt. No. 1, ¶ 10).³A senior manager for Defendant asserts that it "provides a limited warranty in connection with the sale of PEX and other plumbing products." (Dkt. No. 6-2, ¶ 4 (emphasis added)). However, there are no facts in the record regarding the sale of the subject fitting, no evidence of any sales agreement, and no evidence of when or how the limited warranty came into existence.⁴

Defendant's sole argument is that Plaintiff is equitably estopped from avoiding arbitration because Plaintiff "undeniably seeks benefits under the Uponor limited warranty." (Dkt. No. 6-1,

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at 10-11).⁵Defendant, citing to the choice of law provision in the limited warranty, asserts that Minnesota law applies to any dispute between the parties. (Id. at 5). But "[a]pplying [a] choice- of-law clause to resolve the contract formation issue would presume the applicability of a provision before its adoption by the parties has been established." Flores v. Chime Fin., Inc., No. 21-cv-4735, 2022 WL 873252, at *4, 2022 U.S. Dist. LEXIS 52624, at *10 (S.D.N.Y. Mar. 23, 2022) (quoting Schnabel, 697 F.3d at 119). The Court cannot presume that Minnesota law applies because it cannot presume the choice-of-law clause is applicable. Plaintiff argues that the Court

"should apply New York law, as opposed to Minnesota law, as [P]laintiff never executed any contract which contained a provision providing that Minnesota law would apply to a dispute between" Plaintiff and Defendant. (Dkt. No. 13-2, at 10).

"[A] federal court exercising diversity jurisdiction generally must apply the choice-of-law rules of the state in which the court sits." Liberty Synergistics Inc. v. Microflo Ltd., 718 F.3d 138, 153 (2d Cir. 2013). "Applying New York's choice-of law analysis for contract claims, the Court must next consider whether an actual conflict exists between the state laws that are implicated."

Flores, 2022 WL 873252, at *4, 2022 U.S. Dist. LEXIS 52624, at *10 (quoting Curley v. AMR Corp., 153 F.3d 5, 12 (2d Cir. 1998)). "Laws are in conflict '[w]here the applicable law from each jurisdiction provides different substantive rules.'" MasterCard Int'l Inc. v. Nike, Inc., 164 F. Supp. 3d 592, 604 (S.D.N.Y. 2016) (citing Int'l Bus. Machines Corp. v. Liberty Mut. Ins. Co.,

363 F.3d 137, 143 (2d Cir. 2004)). "The differences must be relevant to the issue at hand, and

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must have a significant possible effect on the outcome of the trial." Fin. One Pub. Co. v. Lehman Bros. Special Fin., 414 F.3d 325, 331 (2d Cir. 2005) (internal citations and quotations omitted). Defendant's estoppel argument relies on the theory that an entity "knowingly exploiting an agreement with an arbitration clause can be estopped from avoiding arbitration despite having never signed the agreement." See Trina Solar US, Inc. v. Jasmin Solar Pty Ltd, 954 F.3d 567, 572 (2d Cir. 2020); NCMIC Ins. Co. v. Allied Pros. Ins. Co., 110 F.4th 1072, 1076 (8th Cir. 2024). Defendant contends that the doctrine of equitable estoppel in this context is recognized under both Minnesota and New York law. (See Dkt. No. 6-1, at 7). Under New York law, the "guiding principle" of the direct-benefit estoppel theory "is whether the benefit gained by the nonsignatory is one that can be traced directly to the agreement containing the arbitration clause." Trina Solar, 954 F.3d at 572 (quoting Belzberg v. Verus Invs. Holdings Inc., 999 N.E.2d 1130, 1136 (2013)). "The nonsignatory beneficiary must actually invoke the contract to obtain its benefit, or the contract must expressly provide the beneficiary with a benefit." Id. (citing Am. Bureau of Shipping v. Tencara Shipyard S.P.A., 170 F.3d 349, 353 (2d Cir. 1999); Deloitte Noraudit A/S v. Deloitte Haskins & Sells, U.S., 9 F.3d 1060, 1064 (2d Cir. 1993)). C.f. NCMIC,

110 F.4th at 1076 (predicting that, "when faced with a defendant-signatory's attempt to compel a plaintiff-nonsignatory to arbitrate its claims," the Minnesota Supreme Court would hold that the signatory can compel the nonsignatory to arbitrate only if the nonsignatory "directly benefitted"

from the agreement at issue; "[t]his is, in effect, to ask [ ] whether the nonsignatory knowingly s[ought] and obtain[ed] 'direct benefits' from the contract" (internal quotations and citation omitted)).

But even assuming Defendant is correct—that the doctrine of equitable estoppel in this context is recognized under both Minnesota and New York law— Defendant has failed to cite

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any case law or identify any facts supporting the application of equitable estoppel on this record. There is nothing before the Court that suggests Plaintiff is relying on the limited warranty containing the arbitration clause, and Defendant's caselaw is not at all analogous to the facts of this case.

Defendant's principal argument is that Plaintiff is equitably estopped from avoiding arbitration because Plaintiff included a cause of action for breach of express and implied warranties in its Complaint. (Dkt. No. 6-1, at 6-11). Defendant contends that "Plaintiff unequivocally admits and acknowledges in the Complaint that the subject dispute involves the breach of the limited express warranty provided by Uponor." (Id. at 7). But the Complaint does not refer to or rely on a limited express warranty provided to the property owner. The Complaint alleges that Defendant "expressly and implicitly warranted to the general public that the [f]itting was merchantable in that it was fit for ordinary purposes and safe for its intended use." (See Dkt. No. 2, ¶ 26 (emphasis added)). The limited express warranty expressly disclaims the warranties of merchantability and fitness for a particular purpose. (Dkt. No. 6-6, at 3). Moreover, the Complaint seeks consequential damages, (see Dkt. No. 2), which are also expressly disclaimed in the limited express warranty, (see Dkt. No. 6-6, at 3).

In support of its argument, Defendant cites Upstate Shredding, LLC v. Carloss Well Supply Co., 84 F. Supp. 2d 357 (N.D.N.Y. 2000). In Upstate Shredding, the plaintiff company sued a manufacturer of a shredder drive system for breach of contract and breach of express and implied warranties. Id. at 359-60. The plaintiff also sued Waukesha, the manufacturer of the gas engines that were part of the shredder system, for breach of express and implied warranties. Id. Waukesha moved to compel arbitration, arguing that the "Express Limited Warranty [ ] provided to [the plaintiffs] contain[ed] an arbitration provision" which provided that the warranty

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"extended to all owners in the original chain of distribution." Id. at 360. The plaintiffs argued that they could not be bound by the arbitration provision because they "were not aware of the existence of the Waukesha Express Limited Warranty" prior to the commencement of the action. Id. at 361.

But the court in Upstate Shredding observed that, in their complaint, the plaintiffs

"allege[d] knowledge of, and reliance on, the terms and conditions of the Express Warranty at the time they purchased the gas engines." Id. at 363.⁶The plaintiffs took "an inconsistent position in connection with" the motion to compel arbitration, "[n]otwithstanding the clear and unambiguous language" in the complaint. Id. at 363. The court reasoned that plaintiffs sought to

"have their cake and eat it too; they claim[ed] reliance on the Express Warranty to establish a claim for breach of the express warranty and, at the same time, disclaim[ed] reliance on that same warranty to avoid arbitration." Id. Accordingly, the court granted Waukesha's motion to compel arbitration. Id.

This case is readily distinguishable from Upstate Shredding. Unlike the plaintiffs in Upstate Shredding, Plaintiff does not allege that its insured purchased the fitting, nor does it allege "knowledge of, and reliance on, the terms and conditions" of the limited warranty in its Complaint. See id. There is no reference to the limited warranty in the Complaint. And the Complaint seeks consequential damages, (see Dkt. No. 2), which are expressly disclaimed in the warranty, (see Dkt. No. 6-6, at 3). To the extent Defendant argues Plaintiff attempted to avail itself of the warranty claim process described in the limited warranty when Plaintiff's counsel contacted "Uponor North America" regarding a joint inspection, (see Dkt. Nos. 6-1, at 3-4, 10- 11; 6-3), that argument lacks merit; the letter from Plaintiff's counsel does not include any

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reference to the limited warranty or the warranty claim process described therein. (See id.). The confirmation email from Uponor's warranty team is not responsive to Plaintiff's counsel's request. (See Dkt. No. 6-4, at 2).⁷

Defendant has not provided any evidence of an agreement or any direct benefit gained by Plaintiff or its insured "that can be traced directly to [an] agreement containing the arbitration clause." See Trina Solar, 954 F.3d at 572. There is no record evidence that Plaintiff has ever

"invoked" the limited warranty to obtain its benefit. Defendant has not therefore shown that Plaintiff is equitably estopped from avoiding arbitration. See id. at 572-73 (reversing and remanding where district court held nonsignatory company was estopped from avoiding arbitration clause in parties' agreement; nonsignatory company "surely benefited from the contractual relationship" between the signatories to the contract, "as it ultimately received solar panels" sold by one signatory to the other, but there was "no record evidence that [nonsignatory] ever invoked the Contract to demand delivery of the solar panels, and the Contract itself [did] not provide [the nonsignatory] any direct benefit"); c.f. NCMIC, 110 F.4th at 1078 (holding that defendant could not compel plaintiff to arbitrate its claims under a theory of direct-benefits estoppel where defendant failed to establish that plaintiff "directly benefitted" from agreement). Accordingly, Defendant's motion to compel arbitration is denied.