### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ No. 17

- 3474
D UNCAN P LACE O WNERS A SSOCIATION , on its own behalf and as assignee of the Association Members, Plaintiff

- Appellant ,

v.

D ANZE , I NC

. , f /k/a G LOBE U NION A MERICA C ORPORATION , and G LOBE U NION G ROUP , I NC ., Defendant s

- Appellee s

.

____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1 5 C 01662

— Edmond E. Chang , Judge

.

____________________
A RGUED A PRIL 4, 2018

— D ECIDED J UNE 19, 2019

____________________

Before W OOD , Chief Judge , and B AUER and S YKES , Circuit Judges

. S YKES , Circuit Judge

. In 2009 faucets manufactured by Illinois

- based Danze, Inc., were installed in all 63 units of a new condominium building in S eattle, Washington. In the2 No. 17

- 3474

years that followed , some of the faucets failed , causing damage to the building and replacement costs. The condominium association, Dunc an Place Owners Association, filed

a proposed class

- action suit against Danze raising multiple claims for relief, including breach of express warranty, unjust

enr ichment, negligence, and strict product liability. The distri ct judge dismissed all but one of the claims and later entered summary judgment on the sole remaining claim

. Duncan Place appeal s , seeking reinstatement of the claims that were dismiss ed on the pleadings

. We affirm, with

one narrow exception

. The Washington Product Liability A ct (“WPLA ” or “the Act” ) subsumes all common

- law product

liability claims, so we construe Duncan Place’s negligence and strict

- liability claims as one cause of action under the Act

. In a suit for damages caused by a defective product, Washington’s “ ind ependent duty doctrine” ( formerly known as the “economic loss doctrine” ) generally b ars recovery in tort for direct and consequenti al economic loss es stemming from the product ’s failure

— that is, damages associated with the “ injury ” to the product itself. But the doctri ne d oes not bar recovery for damage to other property caused by the defective product. See Eastwood v. Horse Harbor Found., Inc. , 241 P.3d 1256, 1265 (Wash. 2010) (en banc). Duncan Place allege s in general terms that the defective faucets caused damage to other condominium property. To that limited extent, the WPLA claim is not blocked by the independent

duty doctrine and should have been allowed to proceed

. Duncan Place ’s arguments for reinstatement o f its warranty and unjust

- enrichment claims are new on appeal

. A rguments not raised in the district court are waived , so weNo. 17

- 3474 3

affirm the dismissal of the warranty and unjust

- enrichment claims

. I. Background We take the following fact ual allegations from Duncan Place ’s second amended complaint , accept ing them as true for present purposes

. When the Duncan Place co ndominium complex was built in 2009, the developers installed Danze faucets in the bathrooms of each of the 63 units. The water hoses in Danze ’s faucets are made from an inferior low nickel st ainless

- st eel alloy that makes them vulnerable to corrosion and cracking when put to normal use. As a result several of the faucets failed caus ing “extensive property damage ” and replacement costs.
Danze’s “limited lifetime warranty ” guarantees the quality of its faucets and promises to replace any parts that prove defective. Nonetheless, Danze refused to repair or replace the faucets.
The Duncan Place Owners Association filed th is lawsuit in federal court in the Northern District of Illinois o n behalf of itself, the condominium’s 63 unit owners, and a proposed nationwide class of original c onsumer end

- users of Danze faucets with a steel

- braided supply hose. The suit asserted claims under Washington law, including breach of express

wa rranty, unjust enrichment, negligence, and strict product liability, as well as other state

- law claims that have since dropped out of the case.
Danze moved to dismiss on the ground that Duncan Place lacked associational standing to assert the rights of th e unit owners. The judge agreed and dismissed the claims brought on their behalf

. Duncan Place then amended its4 No. 17

- 3474

complaint to reflect that it had obtained assignments from 41 of the 63 unit owners , eliminating the need for asso ciational standing to support its assert ion of their rights

. Danze again m o ved to dismiss . T h e judge granted the motion for the most part

. H e held that Washington’s independent

- duty doctrine barred the claims of negligence and strict product liability and dismissed them. The judge also dismissed the unjust

- enrichment claim because it was premised on fraud but did not satisfy the heightened pleading requirements of Rule 9(b) of the Fe deral Rules of Civil Procedure.
In the same order , the judge explained that to prevail on

a claim for breach of an express warranty under Washington law , a plaintiff must show that he was aware of the warranty. Allegations of that sort did not appear in th e amended complaint , so t he judge gave Duncan Place an opportunity
to investigate whether it had a good

- faith basis to allege that any of the 41 unit owners knew of the warranty

. After several months of investigation, Duncan Place was unable to make those allegations in good faith with respect to any of the unit owners

. T he judge dismissed the express

- warranty claim brought on t he unit owners’ behalf

. Th at left only D uncan Place’s own claim for breach of express warranty. The judge eventually entered s ummary judgment for Danze on that claim, setting up this appeal.
II. Discussion Duncan Place does not challenge the judge’s summary

judgment ruling

. This appeal focuses instead on the claims that were dismissed on the pleadings

— namely, the claims for brea ch of express warranty, unjust enrichment, negli-No. 17

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gence, and product liability

. Waiver doctrine precludes our consideration of some of Duncan Place’s arguments. For what remains, our review of the judge’s dismissal order is de

novo. Catinella v. County of Co ok , 881 F.3d 514, 518 (7th Cir. 2018)

. A. Warranty and Unjust

- Enrichment Claim s ; W aiver
Duncan Place seeks reinstate ment of the warranty and unjust

- enrichment claims brought on behalf of the unit

owners . I ts arguments are new on appeal and thus are waived

. Taking the warranty claim first, a s we’ve just explained , t he judge ultimately dismissed this claim because Duncan Place could not allege in good faith that any of the unit owners were aware of Danze’s warranty at the time of pur chase. On appeal Duncan Pla ce argues that Washington law requires that element i f the claim i s based on representations contained in advertisement s but not if the claim is based on a standard written warrant y like Danze’s lifetime limited warranty

. We don’t need to decide if that is an accurate statement of Washington law

. Duncan Place never raise d this specific legal argument in the district court. Normally “a party waives the ability to make a specific argument for the first time on appeal when the party failed to present that sp ecific argument to the district court, even though the issue may have been before the district court in more general terms.” Homoky v. Ogden , 816 F.3d 448, 455 (7th Cir. 2016) (quoting Hannemann v. Door Cty. Sch. Dist. , 673 F.3d 746, 754 (7th Cir. 2012) )

. T here is an exception , however

. If the district court raises an issue sua sponte and the appellate brief is the first6 No. 17

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opportunity to discuss it , the waiver rule does not preclude review

. Prop. & Cas. Ins. Ltd. v. Cent. Nat ’l Ins. Co. of Omaha , 936 F.2d 319 , 323 n.7 (7th Cir. 1991). The exception to the waiver rule doesn’t open the door for review of th is argument. It’s true that the judge sua sponte raised the issue about the unit holder’s knowledge of the warranty. Ruling on the second motion to dismiss, he informed the parties that under Washington law the unit

owners could prevail on the warrant y claim only if they knew of Danze’s warranty at the time of purchas e. The amended complaint w as silent on this subject, so t he judge gave Duncan Place an opportunity to file a position statement clarify ing the matter. He also warned that the warranty claim would be dismissed if Duncan Place’s follow

- up submission revealed that the unit owners did not know about the warranty at the time of purchase.
In t he months that followed, Duncan Place filed three position statements on this subject . In the first and second, it reported that it had been unable to confirm whether 39 of the 41 unit owners were aware of Danze’s warranty . Two

owners initially said they w ere aware of it but later recanted

. In n either position statement did Duncan Place advance an argu ment that the knowledge requirement did not apply at all

. After the second p osition statement but before the third, the judge held a hearing at which Danze announced its intention to renew its motion to dismiss based on Duncan Place’s inability to allege that the unit owners were aware of the warranty . Duncan Place did no t take th is opportunity to argue that Washington law distinguishes between represen-No. 17

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tation s made in advertisements and representations made in

a standard written warrant y like the one at issue here

. S oon after th is hearing , Duncan Place filed its thi rd and final pos ition statement . Like the first two, this one did not so much as hint that the k nowledge requirement was inapplicable because the claim alleged b reach of a standard written warrant y

. Rather, Duncan Place a sked for more time to investigate the extent of the unit owners’ knowledge. At yet a nother hearing a few weeks later, the parties again discussed th e knowledge issue. As before, Duncan Place never suggested that knowledge of the warranty was not required.
In s hort, Duncan Place had multiple opportunities to advance the argument it now raises on appeal . At every turn, it failed to do so. That ’s a waiver. And because Duncan Place makes no other argument to support reinstatement of the warranty claim on behalf of the unit owners , we affirm the dismissal of that claim. Next up is the claim for unjust

- enrichment. The judge ruled that the u njust

- enrichment claim i s premised on fraud and thus the amended complaint had to satisfy the heightened pleading requirements of Rule 9(b). Because i t did not, the judge dismissed the claim.
Duncan Place concedes on appeal that its fraud allegations are i nadequate under Rule 9(b) . It argues instead that the judge should have excis ed the fraud allegations and evaluat ed whether the remaining nonfraud allegations stated a claim for unjust enrichment under Rule 8(a).
It is not clear to us that there is anything left of the unjust

- enrichment claim if the fraud allegations are disre-8 No. 17

- 3474

garded

. But we don’t need to sort that out . T his argument too is waived because Duncan Place never raise d it in the district court

. Duncan Place insists that it preserved th e argument by contending below that Rule 9 (b) d oes not apply at all . B ut that general contention is insufficient to preserve the specific argumen t Duncan Place advances here

. See Homoky , 816 F.3d at 455. Duncan Place points out that its response to Danze’s second motion to dismiss cited Goodman v. HTC Am erica , Inc. , No. C 11

- 1793 MJP , 2012 WL 2412070 , at *9 (W.D. Wash. June 26, 2012) , which discusses the two

- step approach that it argues should have been applied here

. Goodman indeed address es th at subject, b ut Duncan Place never drew the judge’s attention to th e relevant part of th e case . I nstead , it rel ied on Goodman for a different p urpose

. Because Duncan Place raises no other argument to support reinstat ement of the unju st

- enrichment claim, we affirm the dismissal of that claim.

B

. Product

- Liability Claim The judge dismissed Duncan Place’s claims for negligence and strict product liabilit y, reasoning that Washington’s independent

- duty doctrine block s recovery . That’s partially correct

. In a suit for damag es caused by a defective product, Washington’s independent

- duty doctrine generally bars recover y in tort for economic losses associated with the injury to the product itself, but it does not bar recovery of damages for injury to other property cause d by th e defective product

. At the outset we note that the Washington Product Liability Act “created a single cause of action for product

-No. 17

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related harms, and supplants previously existing commonlaw remedies, including common law actions for negligence.” Wash. Sta te Physicians Ins. Exch. & Ass’n v. Fisons Corp. , 858 P.2d 1054, 1066 (Wash. 1993) (en banc) ; see also W ASH

. R EV

. C ODE § 7.72.010(4). W e therefore construe the claims styled as neglig ence and strict product liability as one WPLA claim.
U nder the WPLA, a manufacturer is liabl e for harm proximately caused by its defective product s , W ASH

. R EV

. C ODE § 7.72.030(1), but not all harms are cognizable under the Act , id. § 7.72.010(6). Economic l oss es arising from defective products often trigger remedies in both c ontract and tort , and Washington’s independent

- duty doctrine

— formerly known as the economic

- loss doctrine

— provides a test for “distinguish [ing] between claims where a plaintiff is limited to contract remedies and cases where recovery in tort may be availab le

. ” Eastwood , 241 P.3d at 1261

– 62

. In Eastwood the Washington Supreme Court renamed and substantially clarified the contours of the doctrine. The court began with the terms of the WPLA , which codifie d the “tort duty to avoid product designs and construction that are unreasonably dangerous .” 1 Id

. at 1265; see W ASH

. R EV

. C ODE § 7.72.030(1)

– (2). T he Act’s definition of “ harm ” includes “any damages reco gnized by the courts of this state” but specifically e xcludes “ direct or consequential economic loss under Title 62A, ” the state’s version of the Uniform Commercial Code. W ASH

. R EV

. C ODE § 7.72.010(6). This limit ing language “ leav [es] the law of sales contracts as the sole

1 The Act also covers harm caused by inadequate product warnings, see W

ASH

. R EV

. C ODE § 7.72.030(1)(b)

– (c)) , but that’s not at issue here.10 No. 17

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source of a plaintiff’s remedy for e conomic loss

. ” Eastwood , 241 P. 3 d at 1265. But this limitation applies to economic losses associated with a breach of contract ual duties. Under Washington’s independent

- duty doctrine , a product

- related inju ry “is remediable in tort if it traces back to the breach of a tort duty arising independently of the terms of the contract.” Id. at 1262. T o determine whether a harm can be reasonably traced to a tort duty independent of the contract , the Washington Supreme Court has adopted a “risk of harm ” test that endeavors to “distinguish [] between a harm that implicatesonly the contract and a harm that implicates the independent [tort] duty as well.” Id

. at 1265. Relevant factors in the risk

- of

- harm analysis include t he nature of the product defect, the type of risk at issue, and the manner in which the injury arose

. Id

. Crucial for our purposes, however, Eastwood explain s that

“ [w ] hen a product defect results in a personal injury or damage to other property , the cause can plainly be a breach of the tort duty. ” Id

. (emphasis added). On the other hand,“[w]hen a product defect results in injury only to the product itself, ... the risk of harm must be carefully analyzed.” Id

. Accordingly, Washington law allows t ort recovery for economic loss associated with the product’s failure

— i.e., tort recovery for “ injury ” to the product itself

— only if the product is hazardous and poses an unreasonable risk of harm under the “risk of harm” test, implicating the “safety interests of the WPLA

. ” Id.
So the first step in the analysis is to determine whether the plaintiff seeks recover y for losses associated with damage to the product itself , on the one hand, or for personalNo. 17

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injury or damage to other property, on the other. Id. If the injury falls in the first category, then the next step requires application of the risk

- of

- harm test to determine whether the injury is nonetheless cognizable in tort under the Act

. Id. If it falls in the second category, however, the claim is cognizable under the Act without further analysis because “the cause can plainly be a breach of the tor t duty” independent of the
contract

. Id.

Here t he judge acknowledged that the claim seeks recovery for damage to other property

— i.e., other parts of the condominium build ing

— caused by the defective faucets. But he went on to conduct a risk

- of

- harm analysis as if Duncan Place sought to recover for faucet

- related injuries alone . That

was error. The amended complaint alleges that Danze’s defective faucets caused “extensive da mage” to the condominium building. To that extent, the WPLA claim should have been allowed to move forward

. There is an important limitation , however

. As we’ve explained, Duncan Place obtained assignments from 41 unit

owners , and e veryone agrees that it ma y assert the rights of th os e unit owners

. O n remand the WPLA claim may proceed to the extent that it alleges that Danze’s defective faucets caused damage to other property in those 41 un its

. As it stands, t he amended complaint contains specific allegations only with respect to two unit owners; the allegations about “extensive damage ” to the condominium building are otherwise quite general. The se general ized allegations support an inference that the defective faucets caused damage to common condominium property as well , and w e take this to mean that the homeowners’ association also asserts12 No. 17

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this claim on its own behalf

. T o that additional extent , the claim may proceed to factual development

. Finally, Duncan Pla ce insists that it may also assert the rights of the unit owners f rom whom it did not obtain assignment s

. This argument verges on frivolous

. “[W]hether an association has standing to invoke the court’s remedial powers on behalf of its members depends in su bstantial measure on the nature of the relief sought.” Warth v. Seldin , 422 U.S. 490, 515 (1975). “‘ [ I ] ndividual participation’ is not normally necessary when an association seeks prospective or injunctive relief for its members, but ... such participationwould be required in an action for damages to an association’s members

... .” United Food & Commercial Workers Unio n Local 751 v. Brown Grp., Inc. , 517 U.S. 544, 546 (1996) (citing Hunt v. Wash. State Apple Advert. Comm’n , 432 U.S. 333, 343 (1977) ). A ssociation al standing is inappropriate if “whatever injury may have been suffered is peculiar to the individual members concerned, and both the fact and extent of injury would require individualized proof.” Warth , 422 U.S. at 515

– 16 ; see also Sanner v. Bd. of Trade of City of Chi. , 62 F.3d 918, 923(7th Cir. 1995) (forbidding a farming association from asserting standing on behalf of its members where the suit would“require the calculation of damages for each of the individual farmers”).
Duncan Place has no viable claim for prospective relief. What it casts as a plea for declaratory and injunctive relief is instead a strai ghtforward claim for damage s. Duncan Place seeks a declarat ion announcing that all Danze faucets manufactured from 2000 to the present have defect s of whichNo. 17

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Danze was well aware

. 2 This request reflects a misunderstanding of the purpose of declaratory judgm ents

. A declaratory judgment serves to “settle the particular controversy and clarify the legal relations at issue.” NUCOR Corp., v. Aceros Y Maquilas de Occidente, S.A. de C.V. , 28 F.3d 572, 579 (7th Cir. 1994) (quoting Sears, Roebuck & Co. v. Am. Mut. Li ab. Ins. Co. , 372 F.2d 435, 438 (7th Cir. 1967)) . A declaration that Danze produced defective faucets would not settle the controversy between Duncan Place and Danze or clarify their legal relationship. It would only lay the groundwork for a claim for damages.
A nd a ssociational standing cannot support a damages claim on behalf of the non assigning unit owners. There ’ s no question that each unit owner with a viable claim w ould have to p rovide “individualized proof” of “the fact and extent of i njury” to the condominium unit

. Warth , 422 U.S. at 515

– 16

. In sum , w e A FFIRM the dismissal of Duncan Place’s warranty and unjust

- enrichment claims , R EVERSE the dismissal of Duncan Place’s WPLA claim , and R EMAND for further proceedings consistent with this opinion

.

2 Duncan Place also seeks declarat ory and injunctive relief regarding Danze’s failure to honor its warranty

. W e’re affirming the dismissal of the warranty claim, so we need say no more about associational standing to pursue these remedies.